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What changed in COLUMBIA BANKING SYSTEM, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COLUMBIA BANKING SYSTEM, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+485 added−461 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in COLUMBIA BANKING SYSTEM, INC.'s 2024 10-K

485 paragraphs added · 461 removed · 312 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+50 added−18 removed107 unchanged
Biggest changeIn addition to the factors set forth in the sections titled “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K, the following factors, among others, could cause actual results to differ materially from the anticipated results expressed or implied by forward-looking statements: • changes in general economic, political, or industry conditions, and in conditions impacting the banking industry specifically; • deterioration in economic conditions that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans; • uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve or the effects of any declines in housing and commercial real estate prices, high or increasing unemployment rates, continued inflation, or any recession or slowdown in economic growth particularly in the western United States; • volatility and disruptions in global capital and credit markets; • the impact of bank failures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks; • changes in interest rates that could significantly reduce net interest income and negatively affect asset yields and valuations and funding sources, including impacts on prepayment speeds; • the impact of transition of LIBOR to other indexes including SOFR; • competitive pressures among financial institutions and nontraditional providers of financial services, including on product pricing and services; • continued consolidation in the financial services industry resulting in the creation of larger financial institutions that have greater resources; • our ability to successfully, including on time and on budget, implement and sustain information technology product and system enhancements and operational initiatives; 5 Table of Contents • our ability to attract new deposits and loans and leases; • our ability to retain deposits; • our ability to achieve the efficiencies and enhanced financial and operating performance we expect to realize from investments in personnel, acquisitions, and infrastructure; • the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; • demand for financial services in our market areas; • stability, cost, and continued availability of borrowings and other funding sources, such as brokered and public deposits; • changes in legal or regulatory requirements or the results of regulatory examinations that could increase expenses or restrict growth; • changes in the scope and cost of FDIC insurance and other coverage; • our ability to manage climate change concerns, related regulations, and potential impacts on the creditworthiness of our customers; • our ability to recruit and retain key management and staff; • our ability to raise capital or incur debt on reasonable terms; • regulatory limits on the Bank's ability to pay dividends to the Company that could impact the timing and amount of dividends to shareholders; • financial services reform and the impact of legislation and implementing regulations on our business operations, including our compliance costs, interest expense, and revenue; • a breach or failure of our operational or security systems, or those of our third-party vendors, including as a result of cyber-attacks; • success, impact, and timing of our business strategies, including market acceptance of any new products or services; • the outcome of legal proceedings; • our ability to effectively manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk and regulatory and compliance risk; • the possibility that the anticipated benefits of the Mergers are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where we do business; • potential adverse reactions or changes to business or employee relationships, including those resulting from the integration of the two companies and banks; • economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates; • the effect of geopolitical instability, including wars, conflicts, and terrorist attacks; • natural disasters, including earthquakes, tsunamis, flooding, fires, pandemics, and other similarly unexpected events outside of our control; • our ability to effectively manage problem credits; • our ability to successfully negotiate with landlords or reconfigure facilities; and • the effects of any damage to our reputation resulting from developments related to any of the items identified above. 6 Table of Contents There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements.
Biggest changeIn addition to the factors set forth in the sections titled “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K, the following factors, among others, could cause actual results to differ materially from the anticipated results expressed or implied by forward-looking statements: • changes in general economic, political, or industry conditions, and in conditions impacting the banking industry specifically; • deterioration in economic conditions that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans; • uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve or the effects of any declines in housing and commercial real estate prices, high or increasing unemployment rates, continued or renewed inflation, or any recession or slowdown in economic growth particularly in the western United States; • volatility and disruptions in global capital and credit markets; • the impact of proposed or imposed tariffs by the U.S. government or potential retaliatory tariffs imposed by U.S. trading partners that could have an adverse impact on customers; • the impact of bank failures or adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks; • changes in interest rates that could significantly reduce net interest income and negatively affect asset yields and valuations and funding sources, including impacts on prepayment speeds; • competitive pressures among financial institutions and nontraditional providers of financial services, including on product pricing and services; • continued consolidation in the financial services industry resulting in the creation of larger financial institutions that have greater resources; • our ability to successfully, including on time and on budget, implement and sustain information technology product and system enhancements and operational initiatives; • our ability to attract new deposits and loans and leases; • our ability to retain deposits; • our ability to achieve the efficiencies and enhanced financial and operating performance we expect to realize from investments in personnel, acquisitions, and infrastructure; 5 Table of Conte n t s • the possibility that our recorded goodwill could become impaired, which may have an adverse impact on our earnings and capital; • demand for financial services in our market areas; • stability, cost, and continued availability of borrowings and other funding sources, such as brokered and public deposits; • changes in legal or regulatory requirements or the results of regulatory examinations that could increase expenses or restrict growth; • changes in the scope and cost of FDIC insurance and other coverage; • our ability to manage climate change concerns, related regulations, and potential impacts on the creditworthiness of our customers; • our ability to recruit and retain key management and staff; • our ability to raise capital or incur debt on reasonable terms; • regulatory limits on the Bank's ability to pay dividends to the Company that could impact the timing and amount of dividends to shareholders; • financial services reform and the impact of legislation and implementing regulations on our business operations, including our compliance costs, interest expense, and revenue; • a breach or failure of our operational or security systems, or those of our third-party vendors, including as a result of cyber-attacks; • success, impact, and timing of our business strategies, including market acceptance of any new products or services; • the outcome of legal proceedings; • our ability to effectively manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk and regulatory and compliance risk; • the possibility that the anticipated benefits from ongoing initiatives to improve operational performance are not realized in the amounts or when expected if at all; • economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates; • the effect of geopolitical instability, including wars, conflicts, and terrorist attacks; • natural disasters, including earthquakes, tsunamis, flooding, fires, pandemics, and other similarly unexpected events outside of our control; • our ability to effectively manage problem credits; • our ability to successfully negotiate with landlords or reconfigure facilities; and • the effects of any damage to our reputation resulting from developments related to any of the items identified above.
As a division of Umpqua Bank, the Wealth Management team provides a full suite of financial planning, investment, trust, insurance, and private banking solutions to individuals, families, and businesses through the Columbia Wealth Advisors, Columbia Trust Company, and Columbia Private Bank.
As a division of Umpqua Bank, the Wealth Management team provides a full suite of financial planning, investment, trust, insurance, and private banking solutions to individuals, families, and businesses through Columbia Wealth Advisors, Columbia Trust Company, and Columbia Private Bank.
The CRA requires that, in connection with examinations of financial institutions within their jurisdiction, the Federal Reserve, OCC or the FDIC evaluate the record of the financial institution in meeting the credit needs of its local communities, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the institution.
The CRA requires that, in connection with examinations of financial institutions within their jurisdiction, the Federal Reserve, the OCC or the FDIC evaluate the record of the financial institution in meeting the credit needs of its local communities, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the institution.
On October 24, 2023, the Federal Reserve, FDIC and the OCC jointly issued a final rule amending the agencies’ CRA regulations to achieve the following goals: (i) encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity and consistency in the application of the CRA regulations and (iv) tailor CRA evaluations and data collection to bank size and type.
On October 24, 2023, the Federal Reserve, the FDIC and the OCC jointly issued a final rule amending the agencies’ CRA regulations to achieve the following goals: (i) encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity and consistency in the application of the CRA regulations, and (iv) tailor CRA evaluations and data collection to bank size and type.
Under the Oregon Bank Act and Federal Deposit Insurance Corporation Improvement Act of 1991, Umpqua Bank is subject to restrictions on the payment of cash dividends to its parent company and may be required to receive prior approval in certain circumstances.
Under the Oregon Bank Act and the Federal Deposit Insurance Corporation Improvement Act of 1991, Umpqua Bank is subject to restrictions on the payment of cash dividends to its parent company and may be required to receive prior approval in certain circumstances.
However, the examination authority of the Federal Reserve and the FDIC allows them to examine supervised banks as frequently as deemed necessary based on the condition of the Bank or as a result of certain triggering events.
However, the examination authority of the Federal Reserve and the FDIC allows them to examine supervised banks as frequently as deemed necessary based on the condition of the supervised bank or as a result of certain triggering events.
These new rules also require disclosures in Annual Reports on Form 10-K describing (i) the processes for assessing, identifying and managing material risks from cybersecurity threats, (ii) the material effects or reasonably likely material effects of risks from cybersecurity threats and previous cybersecurity incidents and (iii) the board of directors’ oversight of risks from cybersecurity threats and management’s role and expertise in assessing and managing material risks from cybersecurity threats.
These rules also require disclosures in Annual Reports on Form 10-K describing (i) the processes for assessing, identifying and managing material risks from cybersecurity threats, (ii) the material effects or reasonably likely material effects of risks from cybersecurity threats and previous cybersecurity incidents, and (iii) the board of directors’ oversight of risks from cybersecurity threats and management’s role and expertise in assessing and managing material risks from cybersecurity threats.
These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations. In addition, on July 26, 2023, the SEC adopted new rules that require reporting in Current Reports on Form 8-K of material cybersecurity incidents.
These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations. In addition, on July 26, 2023, the SEC adopted rules that require reporting in Current Reports on Form 8-K of material cybersecurity incidents.
These include our retail branches, business and commercial banking teams, Wealth Management experts, as well as professionals in various support functions that enable the business, such as technology, finance, risk, audit, legal, and human resources. Our teams are primarily in eight western states.
These include our retail branches, business and commercial banking teams, wealth management and trust experts, as well as professionals in various support functions that enable the business, such as technology, finance, risk, audit, legal, and human resources. Our teams are primarily in eight western states.
We deliver personalized service and experience through dedicated financial advisors that leverage an approach that revolves around the three stages of the wealth cycle: grow, preserve, and transition. Residential Real Estate Loans. Real estate loans are available for the construction, purchase, and refinancing of residential owner occupied and rental properties.
We deliver personalized service and experience through dedicated financial advisors that leverage an approach revolving around the three stages of the wealth cycle: grow, preserve, and transition. Residential Real Estate Loans. Real estate loans are available for the construction, purchase, and refinancing of residential owner occupied and rental properties.
All information in the table was obtained from S&P Global, which compiles deposit data published by the Federal Deposit Insurance Corporation as of June 30, 2023 and updates the information for any bank mergers and acquisitions completed subsequent to the reporting date.
All information in the table was obtained from S&P Global, which compiles deposit data published by the Federal Deposit Insurance Corporation as of June 30, 2024 and updates the information for any bank mergers and acquisitions completed subsequent to the reporting date.
To ensure the ongoing viability of our product offerings, we regularly examine the desirability and profitability of existing and potential new products. Our customers can access our products through online banking, mobile banking applications, and our website: www.umpquabank.com (information contained on our website is not incorporated by reference into this Annual Report on Form 10-K). Commercial Lending Products.
To ensure the ongoing viability of our product offerings, we regularly examine the desirability and profitability of existing and potential new products. Our customers can access our products through our branch network, mobile banking applications, and our website: www.umpquabank.com (information contained on our website is not incorporated by reference into this Annual Report on Form 10-K). Commercial Lending Products.
The supervisory objectives of the inspection program are to ascertain whether the financial strength of the bank holding company is being maintained on an ongoing basis and to determine the effects or consequences of transactions between a holding company or its non-banking subsidiaries and its subsidiary banks. 19 Table of Contents Banks are subject to periodic examinations by their primary regulators.
The supervisory objectives of the inspection program are to ascertain whether the financial strength of the bank holding company is being maintained on an ongoing basis and to determine the effects or consequences of transactions between a holding company or its non-banking subsidiaries and its subsidiary banks. Banks are subject to periodic examinations by their primary regulators.
For example, with certain exceptions, neither the Company nor its subsidiaries may condition an extension of credit to a customer on either (i) a requirement that the customer obtain additional services provided by us; or (ii) an agreement by the customer to refrain from obtaining other services from a competitor. 14 Table of Contents Support of Subsidiary Banks .
For example, with certain exceptions, neither the Company nor its subsidiaries may condition an extension of credit to a customer on either (i) a requirement that the customer obtain additional services provided by us; or (ii) an agreement by the customer to refrain from obtaining other services from a competitor. Support of Subsidiary Banks .
Under the final rule, a bank holding company, such as the Company, and an FDIC-supervised insured depository institution, such as the Bank, are required to notify the Federal Reserve or FDIC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.
Under the final rule, a bank holding company, such as the Company, and an FDIC-supervised IDI, such as the Bank, are required to notify the Federal Reserve or FDIC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.
The statutory provision is commonly called the “Volcker Rule.” The Volcker Rule does not significantly impact the operations of the Company and the Bank, as we do not have any significant engagement in the businesses prohibited by the Volcker Rule. 21 Table of Contents Interchange Fees The Company is subject to rules governing interchange fees, which establish standards for assessing whether the interchange fees that may be charged with respect to certain electronic debit transactions are “reasonable and proportional” to the costs incurred by issuers for processing such transactions.
The statutory provision is commonly called the “Volcker Rule.” The Volcker Rule does not significantly impact the operations of the Company and the Bank, as we do not have any significant engagement in the businesses prohibited by the Volcker Rule. 21 Table of Conte n t s Interchange Fees The Company is subject to rules governing interchange fees, which establish standards for assessing whether the interchange fees that may be charged with respect to certain electronic debit transactions are “reasonable and proportional” to the costs incurred by issuers for processing such transactions.
We provide loans to individual borrowers for a variety of purposes, including secured and unsecured personal loans, home equity and personal lines of credit, and motor vehicle loans. 8 Table of Contents Market Area and Competition The geographic markets we serve are highly competitive for deposits, loans, and leases.
We provide loans to individual borrowers for a variety of purposes, including secured and unsecured personal loans, home equity and personal lines of credit, and motor vehicle loans. Market Area and Competition The geographic markets we serve are highly competitive for deposits, loans, and leases.
Our approach to sustainability is about making better business decisions that support all of our stakeholders for the long term, and it is embedded in the fabric of our corporate values and culture, driving us to think very intentionally about the communities we serve.
Our approach to sustainability is about making responsible business decisions that support all of our stakeholders for the long term, and it is embedded in the fabric of our corporate values and culture, driving us to think very intentionally about how we serve our communities.
Government Policies The operations of the Company and our subsidiaries are affected by state and federal legislative and regulatory changes and by policies of various regulatory authorities, including domestic monetary policies of the Board of Governors of the Federal Reserve System, United States fiscal policy, and capital adequacy and liquidity constraints imposed by federal and state regulatory agencies.
Government Policies The operations of the Company and our subsidiaries are affected by state and federal legislative and regulatory changes and by policies of various regulatory authorities, including domestic monetary policies of the Federal Reserve, United States fiscal policy, and capital adequacy and liquidity constraints imposed by federal and state regulatory agencies.
The federal banking agencies have not yet taken further action on these proposed standards. 20 Table of Contents State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs with detailed requirements, including data encryption requirements.
The federal banking agencies have not yet taken further action on these proposed standards. State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs with detailed requirements, including data encryption requirements.
Brokered Deposits The FDIA prohibits an insured depository institution from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the Bank’s normal market area or nationally (depending upon where the deposits are solicited) unless it is well-capitalized or is adequately capitalized and receives a waiver from the FDIC.
Brokered Deposits The FDIA prohibits an IDI from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the Bank’s normal market area or nationally (depending upon where the deposits are solicited) unless it is well-capitalized or is adequately capitalized and receives a waiver from the FDIC.
Federal law (i) sets forth circumstances under which officers or directors of a bank may be removed by the institution’s federal supervisory agency; (ii) places constraints on lending by a bank to its executive officers, directors, principal shareholders, and their related interests; and (iii) generally prohibits management personnel of a bank from serving as directors or in other management positions of another financial institution whose assets exceed a specified amount or which has an office within a specified geographic area. 16 Table of Contents Safety and Soundness Standards .
Federal law (i) sets forth circumstances under which officers or directors of a bank may be removed by the institution’s federal supervisory agency; (ii) places constraints on lending by a bank to its executive officers, directors, principal shareholders, and their related interests; and (iii) generally prohibits management personnel of a bank from serving as directors or in other management positions of another financial institution whose assets exceed a specified amount or which has an office within a specified geographic area.
We compete with traditional banking institutions, as well as non-bank financial service providers, such as credit unions, mortgage companies, fintechs, and online based financial service providers. In our primary market areas of Oregon, Washington, California, Idaho, and Nevada, major national banks generally hold top market share positions.
We compete with traditional banking institutions, as well as non-bank financial service providers, such as credit unions, mortgage companies, fintechs, and online based financial service providers. In our market areas of Oregon, Washington, California, Idaho, Nevada, Arizona, Colorado, and Utah, major national banks generally hold top market share positions.
As an insured depository institution with assets of $10 billion or more, the CFPB has primary enforcement and enforcement authority for federal consumer financial laws over the Bank. This includes the right to obtain information about the Bank’s activities and compliance systems and procedures and to detect and assess risks to consumers and markets.
As an IDI with assets of $10 billion or more, the CFPB has primary enforcement and enforcement authority for federal consumer financial laws over the Bank. This includes the right to obtain information about the Bank’s activities and compliance systems and procedures and to detect and assess risks to consumers and markets.
Furthermore, under the FDIA, insurance of deposits may be terminated by the FDIC if the FDIC finds that the insured depository institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
Furthermore, under the FDIA, insurance of deposits may be terminated by the FDIC if the FDIC finds that the IDI has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
As of December 31, 2023, Columbia and the Bank met all capital adequacy requirements under the Capital Rules, as described below.
As of December 31, 2024, Columbia and the Bank met all capital adequacy requirements under the Capital Rules, as described below.
The FDIC and state bank regulatory agencies complete these examinations on a combined schedule. The CFPB has primary examination and enforcement authority over institutions with assets of $10 billion or more, including the Bank, with respect to various federal consumer protection laws, and we are subject to continued examination by the FDIC on certain consumer regulations.
The FDIC and state bank regulatory agencies complete these examinations on a combined schedule. 19 Table of Conte n t s The CFPB has primary examination and enforcement authority over institutions with assets of $10 billion or more, including the Bank, with respect to various federal consumer protection laws, and we are subject to continued examination by the FDIC on certain consumer regulations.
Within our business digital experience, customers can engage in a fully authenticated chat and co-browse feature with a knowledgeable Treasury and Payments representative if they require assistance with any of the Bank’s solutions. Deposit Products.
Within our business digital experience, customers can engage in a fully authenticated chat and co-browse feature with a knowledgeable representative if they require assistance with any of the Bank’s solutions.
(referred to in this Annual Report on Form 10-K as "we," "our," the "Company," and "Columbia") is a registered financial holding company. Columbia completed its previously announced merger with Umpqua Holdings Corporation on February 28, 2023. This combined two premier banks in the Northwest to create one of the largest banks headquartered in the West.
(referred to in this Annual Report on Form 10-K as "we," "our," the "Company," and "Columbia") is a registered financial holding company. Columbia completed its previously announced merger with UHC on February 28, 2023, combining two premier banks in the Northwest to create one of the largest banks headquartered in the West.
You may obtain copies of these reports, and any amendments, through the investor relations section of our website at www.columbiabankingsystem.com . These reports are available through our website as soon as reasonably practicable after they are filed electronically with the SEC. Introduction Columbia Banking System, Inc.
You may obtain copies of these reports, and any amendments, through the investor relations section of our website at www.columbiabankingsystem.com . These reports are available through our website as soon as reasonably practicable after they are filed electronically with the SEC. 6 Table of Conte n t s Introduction Columbia Banking System, Inc.
Umpqua Bank is an Oregon state-chartered commercial bank, the deposits of which are insured in whole or in part by the FDIC. Business Strategy Columbia Banking System, Inc., through its principal subsidiary, Umpqua Bank, seeks to bank businesses of all sizes, along with their owners, executives, and employees, in addition to the residents of the communities it serves.
Umpqua Bank is an Oregon state-chartered commercial bank, the deposits of which are insured in whole or in part by the FDIC. Business Strategy Columbia, through its principal subsidiary, Umpqua Bank, seeks to bank businesses of all sizes, along with their owners, executives, and employees, in addition to the residents of the communities we serve.
In addition, failure to implement or maintain adequate compliance programs could cause bank regulators not to approve an acquisition where regulatory approval is required or to prohibit an acquisition even if approval is not required. In July 2021, the Biden administration issued an executive order on competition, which included provisions relating to bank mergers.
In addition, failure to implement or maintain adequate compliance programs could cause bank regulators not to approve an acquisition where regulatory approval is required or to prohibit an acquisition even if approval is not required. 13 Table of Conte n t s In July 2021, the Biden administration issued an executive order on competition, which included provisions relating to bank mergers.
With respect to branches of Umpqua Bank, the Bank is also subject to certain laws and regulations governing its activities in the states in which we operate. State Bank Regulation . Umpqua Bank, as an Oregon state-chartered bank, is primarily subject to the state-level supervision and regulation of the DCBS.
With respect to branches of Umpqua Bank, the Bank is also subject to certain laws and regulations governing its activities in the states in which we operate. 14 Table of Conte n t s State Bank Regulation . Umpqua Bank, as an Oregon state-chartered bank, is primarily subject to the state-level supervision and regulation of the DCBS.
For additional discussion of this special assessment, see the section entitled "Non-Interest Expense" under Item 7 below. The Volcker Rule The Dodd-Frank Act prohibits banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds.
For additional discussion of this special assessment, see the section entitled "Non-Interest Expense" under Item 7 of this Annual Report on Form 10-K. The Volcker Rule The Dodd-Frank Act prohibits banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds.
Covered financial institutions would be required to provide consumers electronic access to 24 months of transaction data and certain account information under the proposed rule and would be prohibited from imposing any fees or charges for maintaining or providing access to such data. The proposed rule would also impose data accuracy, retention, and other obligations.
Covered financial institutions are required to provide consumers electronic access to 24 months of transaction data and certain account information under the final rule and are prohibited from imposing any fees or charges for maintaining or providing access to such data. The final rule also imposes data accuracy, retention, and other obligations.
For a more detailed discussion of some of the risk factors that could (i) affect our business, financial condition, and future results, or (ii) cause actual results to differ materially from those contemplated by these forward-looking statements, see the section entitled "Risk Factors" under Item 1A below.
For a more detailed discussion of some of the risk factors that could (i) affect our business, financial condition, and future results, or (ii) cause actual results to differ materially from those contemplated by these forward-looking statements, see the section entitled "Risk Factors" under Item 1A of this Annual Report on Form 10-K.
During the second quarter of 2016, the U.S. financial regulators, including the Federal Reserve and the SEC, proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets, but these proposed rules have not been finalized.
During the second quarter of 2016, the U.S. financial regulators, including the Federal Reserve and the SEC, first proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets.
We make forward-looking statements including, but not limited to, statements made about the combined company’s prospects and results following the merger with Umpqua Holdings Corporation and the merger of Columbia State Bank into Umpqua Bank (collectively, the “Mergers”), completed in the first quarter 2023; derivatives and hedging; the results and performance of models and economic forecasts used in our calculation of the ACL; projected sources of funds and the Company's liquidity position and deposit level and types; our securities portfolio; loan sales; adequacy of our ACL, including the RUC; provision for credit losses; non-performing loans and future losses; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; mortgage volumes and the impact of rate changes; the economic environment; inflation and interest rates generally; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including MSR values and sensitivity analyses; tax rates; deposit pricing; and the effect of accounting pronouncements and changes in accounting methodology.
We make forward-looking statements including, but not limited to, statements about derivatives and hedging; the results and performance of models and economic forecasts used in our calculation of the ACL; projected sources of funds and the Company's liquidity position and deposit level and types; our securities portfolio; loan sales; adequacy of our ACL, including the RUC; provision for credit losses; non-performing loans and future losses; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; mortgage volumes and the impact of rate changes; the economic environment; inflation and interest rates generally; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including MSR values and sensitivity analyses; tax rates; deposit pricing; and the effect of accounting pronouncements and changes in accounting methodology.
Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall and the institution’s “eligible retained income” (that is, the greater of (i) net income for the preceding four quarters, net of distributions and associated tax effects not reflected in net income and (ii) average net income over the preceding four quarters).
Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall and the institution’s “eligible retained income” (that is, the greater of (i) net income for the preceding four quarters, net of distributions and associated tax effects not reflected in net income and (ii) average net income over the preceding four quarters). 17 Table of Conte n t s The Capital Rules provide for a number of deductions from and adjustments to CET1.
Our associates are encouraged to use their skills and passions to make a difference in their communities while growing their careers and being recognized and appreciated for their diverse talents, backgrounds, and perspectives. • We emphasize a culture of kindness and positivity, encouraging behaviors consistent with our Do Right TOGETHER 1 values, which describe the qualities we expect all of our associates to embody every day in all interactions with other associates, customers, shareholders, and in our communities. • Diversity, equity, and inclusion are strong anchors in our foundation.
Our associates are encouraged to use their skills and passions to make a difference in their communities while growing their careers and being recognized and appreciated for their respective talents, backgrounds, and perspectives. 9 Table of Conte n t s • We emphasize a culture of kindness and positivity, encouraging behaviors consistent with our Do Right TOGETHER values 1 , which describe the qualities we expect all of our associates to embody every day in all interactions with other associates, customers, shareholders, and in our communities. • I nclusion and belonging are strong anchors in our foundation.
Certain non-capital safety and soundness standards are also imposed upon banks. These standards cover internal controls, information systems and internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, such other operational and managerial standards as the agency determines to be appropriate, and standards for asset quality, earnings, and stock valuation.
These standards cover internal controls, information systems and internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, such other operational and managerial standards as the agency determines to be appropriate, and standards for asset quality, earnings, and stock valuation.
We offer specialized loans for corporate, middle market, and small business customers, including commercial lines of credit and term loans, accounts receivable and inventory financing, international trade finance, commercial property loans, multifamily loans, equipment loans, commercial equipment leases, real estate construction loans and permanent financing, and Small Business Administration program financing as well as capital markets. Treasury Management.
We offer specialized loans for corporate, middle market, and small business customers, including commercial lines of credit and term loans, accounts receivable and inventory financing, international trade finance, commercial property loans, multifamily loans, equipment loans, commercial equipment leases, real estate construction loans and permanent financing, SBA program financing, and capital markets. 7 Table of Conte n t s Treasury Management and Payments.
Credit unions are also not currently subject to certain regulatory constraints, such as the Community Reinvestment Act, which, among other things, requires us to implement procedures to make and monitor loans throughout the communities we serve. Adhering to such regulatory requirements raises the costs associated with our lending activities and reduces potential operating profits.
Credit unions are also not currently subject to certain regulatory constraints, such as the Community Reinvestment Act, which, among other things, requires us to implement procedures to make and monitor loans throughout the communities we serve.
Information about our Executive Officers Information regarding employment agreements with our executive officers is contained in Item 11 below, which item is incorporated by reference to the Proxy Statement.
Information about our Executive Officers Information regarding employment agreements with our executive officers is contained in Item 11 of this Annual Report on Form 10-K, which item is incorporated by reference to the Proxy Statement.
In October 2023, the CFPB issued a proposed rule regarding personal financial data rights that would apply to financial institutions that offer consumer deposit accounts such as Umpqua Bank.
In October 2024, the CFPB adopted a final rule regarding personal financial data rights that applies to financial institutions that offer consumer deposit accounts such as Umpqua Bank.
In addition, under the Bank Merger Act of 1960, as amended, the prior approval of the FDIC is required for the Bank to merge with another bank or purchase all or substantially all of the assets or assume any of the deposits of another FDIC-insured depository institution.
In addition, under the BMA, the prior approval of the FDIC is required for the Bank to merge with another bank or purchase all or substantially all of the assets or assume any of the deposits of another FDIC IDI.
Changes in statutes, regulations, or regulatory policies applicable to us, including the interpretation or implementation thereof, cannot be predicted, but may have a material effect on our business, financial condition, or results of operations.
These statutes and regulations, as well as related policies, are subject to change by Congress, state legislatures and federal and state regulators. Changes in statutes, regulations, or regulatory policies applicable to us, including the interpretation or implementation thereof, cannot be predicted, but may have a material effect on our business, financial condition, or results of operations.
The Capital Rules, among other things (i) include a capital measure called CET1, (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements and (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital. 17 Table of Contents Under the Capital Rules, the minimum capital ratios are (i) 4.5% CET1 to risk-weighted assets, (ii) 6% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets and (iii) 8% total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets.
The Capital Rules, among other things (i) include a capital measure called CET1, (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, and (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital.
Talent Development. We believe in the growth of our associates as individuals and as professionals. Our talent development programs provide our associates with the skills and experiences that allow them to thrive, supporting achievement of their personal career goals. We provide a best-in-class online learning catalog that is on-demand for all associates, in addition to specific training for many roles.
Our talent development programs provide our associates with the skills and experiences that allow them to thrive, supporting achievement of their personal career goals. We provide on-demand learning for all associates, in addition to specific training for many roles. Our development programs build key leadership capabilities, and support growth of our internal leadership talent pipeline.
Stakeholder Engagement We solicit input from our stakeholders through a variety of channels, including: • Customers may provide feedback to any of our associates through our customer resource center and through outreach from our customer insights team. • Associates may provide feedback through periodic engagement surveys, executive listening sessions, and all-hands and division calls. • Communities may reach out anytime or talk directly with footprint-based Community Impact Officers. • We maintain regular contact with government entities and regulatory bodies. • Investors may contact our Director of Investor Relations via our Investor Relations webpage (www.columbiabankingsystem.com). 11 Table of Contents Human Capital In our unique brand of banking, where relationships come first, associates are vital to our success.
Stakeholder Engagement We solicit input from our stakeholders through a variety of channels, including: • Customers may provide feedback to any of our associates through our customer resource center and through outreach from our customer insights team. • Associates may provide feedback through periodic engagement surveys, executive listening sessions, and all-hands and division calls. • Community members or representatives may reach out anytime or talk directly with footprint-based Community Impact Officers. • We maintain regular contact with government entities and regulatory bodies. • Shareholders regularly interact with our executive management team at investor conferences, road shows and 1:1 meetings, and they may contact our Director of Investor Relations directly or via our Investor Relations webpage (www.columbiabankingsystem.com).
Columbia completed its core systems conversion on March 20, 2023, and branch consolidations occurred through the second quarter of 2023. Through the Bank, we provide a broad range of banking, private banking, mortgage, and other financial services to corporate, institutional, small business, and individual customers. FinPac, a commercial equipment leasing company, is a subsidiary of the Bank.
Through the Bank, we provide a broad range of banking, private banking, mortgage, and other financial services to corporate, institutional, small business, and individual customers. FinPac, a commercial equipment leasing company, is a subsidiary of the Bank.
The Company is a bank holding company as defined in the BHCA that has elected to become a financial holding company, and is therefore subject to regulation, supervision, and examination by the Federal Reserve. The Company must file reports with and provide the Federal Reserve such additional information as it may require.
Federal and State Bank Holding Company Regulation General . The Company is a bank holding company as defined in the BHCA that has elected to become a financial holding company, and is therefore subject to regulation, supervision, and examination by the Federal Reserve.
Many states have also recently implemented or modified their data breach notification and data privacy requirements. We expect this trend of state-level cybersecurity regulation to continue and are continually monitoring developments in the states in which the Company operates. In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.
We expect this trend of state-level cybersecurity regulation to continue and are continually monitoring developments in the states in which the Company operates. 20 Table of Conte n t s In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.
Generally, subject to a narrow exception, the FDIA requires the regulator to appoint a receiver or conservator for an institution that is critically undercapitalized. 18 Table of Contents Under the rules currently in effect, the following table presents the requirements for an insured depository institution to be classified as well-capitalized or adequately capitalized: “Well-capitalized” “Adequately capitalized” Total capital ratio of at least 10%, Total capital ratio of at least 8%, Tier 1 capital ratio of at least 8%, Tier 1 capital ratio of at least 6% CET1 ratio of at least 6.5%, CET1 ratio of at least 4.5%, and Tier 1 leverage ratio of at least 5%, and Tier 1 leverage ratio of at least 4%.
Under the rules currently in effect, the following table presents the requirements for an IDI to be classified as well-capitalized or adequately capitalized: “Well-capitalized” “Adequately capitalized” Total capital ratio of at least 10%, Total capital ratio of at least 8%, Tier 1 capital ratio of at least 8%, Tier 1 capital ratio of at least 6% CET1 ratio of at least 6.5%, CET1 ratio of at least 4.5%, and Tier 1 leverage ratio of at least 5%, and Tier 1 leverage ratio of at least 4%.
Interstate Banking and Branching The Interstate Act together with the Dodd-Frank Act relaxed prior interstate branching restrictions under federal law by permitting, subject to regulatory approval, state and federally chartered commercial banks to establish branches in states where the laws permit banks chartered in such states to establish branches.
Umpqua Bank has established policies and risk management activities designed to ensure the safety and soundness of the Bank. 16 Table of Conte n t s Interstate Banking and Branching The Interstate Act together with the Dodd-Frank Act relaxed prior interstate branching restrictions under federal law by permitting, subject to regulatory approval, state and federally chartered commercial banks to establish branches in states where the laws permit banks chartered in such states to establish branches.
Our development programs build key leadership capabilities, and support growth of our internal leadership talent pipeline. We have available new manager programs, tuition reimbursement, banking school participation, coaching, and mentoring programs. Additionally, we have a robust annual talent review and succession planning program that is key to our overall talent management practice.
We have available new manager programs, tuition reimbursement, banking school participation, coaching, and mentoring programs. Additionally, we have a robust annual talent review and succession planning program that is key to our overall talent management practice. This results in targeted development approaches, identification of emerging talent, and a healthy succession-talent bench. Inclusion and Belonging .
Our continued efforts to monitor and comply with new regulatory requirements and developments add to the complexity and cost of our business. 13 Table of Contents Federal and State Bank Holding Company Regulation General .
Our continued efforts to monitor and comply with new regulatory requirements and developments add to the complexity and cost of our business.
A depository institution that is adequately capitalized and accepts brokered deposits under a waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates. Regulatory Oversight and Examination The Federal Reserve conducts periodic inspections of bank holding companies.
A depository institution that is adequately capitalized and accepts brokered deposits under a waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates. In July 2024, the FDIC issued a proposed rule to amend the FDIC’s brokered deposit regulations.
In addition, many positions have incentive plans to encourage achievement of various corporate, business unit, and individual goals. On a regular basis, we conduct an associate engagement survey to gain insights into associate sentiment about various aspects of the associate experience. This feedback is used to assess the effectiveness of our people practices and prioritize enhancements to our programs.
On a regular basis, we conduct an associate engagement survey to gain insights into associate sentiment about various aspects of the associate experience. This feedback is used to assess the effectiveness of our people practices and prioritize enhancements to our programs. Talent Development. We believe in the growth of our associates as individuals and as professionals.
In October 2023, Nasdaq adopted a rule as required by the SEC’s 2022 rule-making that requires listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding a required accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk management control or governance processes pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies. 22 Table of Conte n t s In October 2023, Nasdaq adopted a rule as required by the SEC’s 2022 rule-making that requires listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding a required accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
We continue to innovate and find new ways to provide access to financial solutions across a diverse customer base. • Underscoring our commitment to the growth and success of our customers and their needs, we surveyed 1,250 businesses nationwide to gauge their perspective and plans on the United States economy and business conditions. 2023 was the sixth year in a row that the Bank has published the Umpqua Bank Business Barometer Report with insights from these small and middle market business leaders throughout the country. • In 2023, we continued to invest in community lending efforts to promote access to homeownership for first-time homebuyers through responsible lending practices and education programs. 1 The Do Right TOGETHER values consist of: T: Build TRUST through credibility.
We continue to innovate and find new ways to provide access to financial solutions across a diverse customer base. • In order to reduce the number of unprotected customers and financial loss, in 2024, we launched the fraud prevention initiative Success Against Fraud Events, or S.A.F.E., to reinforce the value of our fraud protection solutions for our business customers. • Underscoring our commitment to the growth and success of our customers and their needs, we surveyed 1,250 businesses nationwide to gauge their perspective and plans on the United States economy and business conditions. 2024 was the seventh year in a row that the Bank has published the Umpqua Bank Business Barometer Report with insights from these small and middle market business leaders throughout the country. • In 2024, we continued to invest in community lending efforts to promote access to homeownership for first-time homebuyers through responsible lending practices and education programs. • Our Client Advisory Board, comprised of customers from around our footprint, meets regularly to discuss new topics, industry trends, products and services that are important to them in order for them to build, operate and grow their businesses.
Forward-looking statements are made as of the date of this Annual Report on Form 10-K. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under federal securities laws.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under federal securities laws. Readers should consider any forward-looking statements in light of this explanation, and we caution readers about relying on forward-looking statements.
As we expand into new markets, we are taking steps that are designed to optimize the resources we consume and minimize the waste we create, limiting our operational impact so that we help both our communities and our bottom line. • The Company's intention to align operational processes with our commitment to reduce our impact on the environment is stronger than ever. • We maintain an Environmental Commitment Statement . • Through the ESG Report, we publicly report our Greenhouse Gas Inventory as well as our energy, water, and business travel usage.
As we expand into new markets, we are taking steps that are designed to optimize the resources we consume and minimize the waste we create, limiting our operational impact so that we help both our communities and our bottom line. • Our fourteen material topics identified in 2024 included energy management, resource management, environmental impact of operations, and environmental benefits of products and services. • We maintain an Environmental Commitment Statement. • We annually report our Greenhouse Gas Inventory as well as our energy, water, and business travel usage.
This regulatory framework is primarily designed for the protection of depositors, customers, federal deposit insurance funds and the banking system as a whole, rather than specifically for the protection of shareholders or non-depository creditors. Due to the breadth and growth of this regulatory framework, our costs of compliance continue to increase in order to monitor and satisfy these requirements.
This regulatory framework is primarily designed for the protection of depositors, customers, federal DIFs and the banking system as a whole, rather than specifically for the protection of shareholders or non-depository creditors.
These provisions “encourage” the Department of Justice and the federal banking regulators to update guidelines on banking mergers and to provide more scrutiny of bank mergers. We are unable to predict what impact the executive order, or any responsive change to such guidelines, will have on the timing of or ability to obtain regulatory approvals of future mergers.
We are unable to predict what impact the executive order, the FDIC statement of policy, the Department of Justice withdrawal from the 1995 Bank Merger Guidelines and the issuance of a banking addendum to the 2023 Merger Guidelines, or any other responsive changes to such guidelines, will have on the timing of or ability to obtain regulatory approvals of future mergers.
Competition also includes small community banks that operate in concentrated areas within our footprint and other regional banks that focus on commercial and retail banking. In 2021, the Bank expanded our market area by adding loan production offices in Colorado and Arizona. In 2023, the Bank further expanded our market area by adding a branch in Utah.
Competition also includes small community banks that operate in concentrated areas within our footprint and other regional banks that focus on commercial and retail banking.
We bring together the power of the collective talents, skills, and expertise of our dedicated associates to realize our purpose, and to deliver on our commitment to our customers and our communities. We believe in helping businesses and families thrive, and equally, in helping our associates thrive.
Human Capital In our unique brand of banking, where relationships come first, associates are vital to our success. We bring together the power of the collective talents, skills, and expertise of our dedicated associates to realize our purpose, and to deliver on our commitment to our customers, shareholders, and communities.
An institution that fails to meet these standards may be subject to regulatory sanctions, including limitations on growth. Umpqua Bank has established policies and risk management activities designed to ensure the safety and soundness of the Bank.
An institution that fails to meet these standards may be subject to regulatory sanctions, including limitations on growth.
Effective as of December 1, 2023, Columbia adopted a clawback policy in accordance with Nasdaq’s listing standards. 22 Table of Contents Proposed Legislation Proposed legislation relating to the banking industry is introduced in almost every legislative session. Certain of such legislation could dramatically affect the regulation of the banking industry.
The excess compensation would be based on the amount the executive officer would have received had the incentive-based compensation been determined using the restated financials. Effective as of December 1, 2023, Columbia adopted a clawback policy in accordance with Nasdaq’s listing standards. Proposed Legislation Proposed legislation relating to the banking industry is introduced in almost every legislative session.
Our approach is a concentrated focus on full banking relationships, bringing together collaborative teams from commercial and consumer banking as well as wealth management, and leveraging our retail branch network to provide community banking at scale. 7 Table of Contents We continually evaluate our existing business processes while focusing on maintaining asset quality and a granular loan and deposit portfolio diversified by product, customer, industry, and geography.
Our approach is a concentrated focus on full banking relationships, bringing together collaborative teams from commercial and consumer banking as well as wealth management, and leveraging our retail branch network to provide community banking at scale through our "Business Bank of Choice" across the West strategy.
Relationship banking is at our core, and our people are the key to maintaining relationships with each other, our customers, and our communities. We intentionally create an environment where associates care about one another, root for the customer down the street, and participate in making their community a better place to live and work.
Our Do Right TOGETHER culture lays the foundation for fostering an environment where associates care about one another, root for the customer down the street, and participate in making their community a better place to live and work.
Planet We focus on smart business operations that benefit both the environment and the company . As a financial institution, we acknowledge the economic, societal, and ecological impacts of climate change to our business and to our customers. It is our responsibility to advance smart, responsible practices that lessen our impact and contribute to the company's business goals.
Over the past decade, more than $2.8 million has been raised and donated to local shelters across our footprint. Planet We focus on smart business operations that benefit both the environment and the Company . As a financial institution, we acknowledge the economic, societal, and ecological impacts of climate change to our business and to our customers.
We attract and reward our associates by providing market competitive compensation and benefit practices. Our compensation approach is designed to pay for performance and reward associate contributions. Our salary structure is informed by market data, and recognizing that the compensation environment is dynamic, we review and adjust our pay ranges regularly. This includes an ongoing practice of analyzing pay equity.
Our salary structure is informed by market data, and recognizing that the compensation environment is dynamic, we review and adjust our pay ranges regularly. This includes an ongoing practice of analyzing pay equity. In addition, many positions have incentive plans to encourage achievement of various corporate, business unit, and individual goals.
We offer competitive medical, dental, vision, life, short and long-term disability, and accident insurance, in addition to paid time off for vacation, sick time, and volunteerism. Medical benefits are available to associates working 30 hours per week, while paid time off begins at 20 hours per week. These programs are assessed regularly against market benchmarks. Compensation.
Medical benefits are available to associates working 30 hours per week, while paid time off begins at 20 hours per week. These programs are assessed regularly against market benchmarks. Compensation. We attract and reward our associates by providing market competitive compensation and benefit practices. Our compensation approach is designed to pay for performance and reward associate contributions.
In 2023, the organization continued to track our corporate responsibility performance against ESG standards outlined by the Global Reporting Initiative and the Sustainability Accounting Standards Board frameworks. Our annual ESG Report is available at the “About Us-Our Impact” section of the Bank's website (www.umpquabank.com) but is not incorporated by reference into this Annual Report on Form 10-K.
Our annual Corporate Responsibility Report is available at the “About Us-Our Impact” section of the Bank's website (www.umpquabank.com) but is not incorporated by reference into this Annual Report on Form 10-K. This report provides additional detail about our commitment to operating responsibly and building long-term value for all of our stakeholders.
Our merger with Umpqua Holdings Corporation accelerated our targeted strategy to expand market share in communities in the western United States. Our scaled franchise and offerings, talented associate base, and customer-focused business model enable us to provide comprehensive financial services in a manner that serves our four identified stakeholder groups: associates, customers, shareholders, and communities.
Our scaled franchise and offerings, talented associate base, and customer-focused business model enable us to provide comprehensive financial services in a manner that serves our four identified stakeholder groups: associates, customers, shareholders, and communities. We seek to expand total revenue while controlling expenses in an effort to gain operational efficiencies and increase our return on average tangible common equity.
We believe this approach enables us to expand lending activities while attracting a stable core deposit base and enhancing utilization of our full range of products and services. Our branch system and other delivery channels are continually evaluated as an important component of ongoing efforts to improve efficiencies without compromising customer service.
Our branch system funds our lending activities and allows us to better serve both retail (consumer) and business (commercial) depositors. We believe this approach enables us to expand lending activities while attracting a stable core deposit base and enhancing utilization of our full range of products and services.
Management will continue to evaluate any changes to CRA regulations. Anti-Money Laundering, Anti-Terrorism and Sanctions. The BSA requires all financial institutions, including banks, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
The BSA requires all financial institutions, including banks, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism. It includes a variety of recordkeeping and reporting requirements (such as cash and suspicious activity reporting) as well as due diligence/know-your-customer documentation requirements.
The severity of these mandatory and discretionary supervisory actions depends upon the capital category in which the institution is placed.
The severity of these mandatory and discretionary supervisory actions depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the FDIA requires the regulator to appoint a receiver or conservator for an institution that is critically undercapitalized.
Our goal is to recruit the best qualified associates, building teams that reflect our communities’ experiences, cultures, and perspectives, and it is our policy to comply with all laws applicable to discrimination in the workplace.
We accomplish this by recruiting the best qualified associates and building teams that reflect our communities. It is our policy to comply with all laws applicable to discrimination in the workplace. We believe we are stronger when we have people at the table who represent the different life experiences and perspectives of our customers and community.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe exercise of regulatory authority may have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects. Additionally, our business is affected significantly by the fiscal and monetary policies of the U.S. federal government and its agencies, including the Federal Reserve.
Biggest changeFurther, regulators have significant discretion and authority to prevent or remedy unsafe or unsound practices or violations of laws or regulations by financial institutions and holding companies in the performance of their supervisory and enforcement duties. The exercise of regulatory authority may have an adverse impact, which could be material, on our business, financial condition, results of operations, and prospects.
This risk is exacerbated by technological developments and trends in customer behavior, including the ease and speed with which deposits may be transferred electronically, particularly by a growing number of customers who maintain accounts with multiple banks. Loss of customer deposits could increase the Company’s funding costs.
This risk is exacerbated by technological developments and trends in customer behavior, including the ease and speed with which deposits may be transferred electronically, particularly by a growing number of customers who maintain accounts with multiple banks. Loss of customer deposits could increase the Company’s funding costs. Loss of customer deposits could increase the Company’s funding costs.
For example, increases in interest rates may result in increases in the number of delinquencies, bankruptcies or defaults by clients and more non-performing assets and net charge-offs, decreases in deposit levels, decreases to the demand for interest rate-based products and services, including loans, and changes to the level of off-balance sheet market-based investments preferred by our clients, each of which may reduce our interest rate spread.
For example, increases in interest rates may result in increases in the number of delinquencies, bankruptcies or defaults by clients and more non-performing assets and net charge-offs, decreases in customer deposit levels, decreases to the demand for interest rate-based products and services, including loans, and changes to the level of off-balance sheet market-based investments preferred by our clients, each of which may reduce our interest rate spread.
The increase in remote and hybrid work arrangements has also increased competition for skilled personnel, and our current or future approach to in-office or remote-work arrangements may not meet the needs or expectations of current or prospective employees or may not be perceived as favorable compared to arrangements offered by other companies, which could adversely affect our ability to attract and retain skilled and qualified personnel.
The increase in remote and hybrid work arrangements has also increased competition for skilled personnel, and our current approach to in-office work may not meet the needs or expectations of current or prospective employees or may not be perceived as favorable compared to arrangements offered by other companies, which could adversely affect our ability to attract and retain skilled and qualified personnel.
Emerging and evolving factors such as the shift to work-from-home or hybrid-work arrangements, changing consumer preferences (including online shopping), and resulting changes in occupancy rates as a result of these and other trends can also impact such valuations over relatively short periods.
Evolving factors such as the shift to work-from-home or hybrid-work arrangements, changing consumer preferences (including online shopping), and resulting changes in occupancy rates as a result of these and other trends can also impact such valuations over relatively short periods.
Rate fluctuations Volatility in interest rates can also result in the flow of funds away from financial institutions into investments such as United States government and corporate securities and other investment vehicles (including mutual funds) that generally pay higher rates of return than financial institutions in part because of the absence of federal insurance premiums.
Volatility in interest rates can also result in the flow of funds away from financial institutions into investments such as United States government and corporate securities and other investment vehicles (including mutual funds) that generally pay higher rates of return than financial institutions in part because of the absence of federal insurance premiums.
A large percentage of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the real estate market or other segments of our loan portfolio would lead to additional losses. As of December 31, 2023, 75% of our total gross loans were secured by real estate.
A large percentage of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the real estate market or other segments of our loan portfolio would lead to additional losses. As of December 31, 2024, 75% of our total gross loans were secured by real estate.
This may cause the Bank to lose some of its low-cost deposit funding. Customers may also continue to move noninterest-bearing deposits into interest-bearing accounts, which increases overall deposit costs. Higher funding costs may reduce the Company’s net interest margin and net interest income.
This may cause the Bank to lose some of its low-cost deposit funding. Customers may also continue to move non-interest-bearing deposits into interest-bearing accounts, which increases overall deposit costs. Higher funding costs may reduce the Company’s net interest margin and net interest income.
As previously disclosed in the Company’s Current Report on Form 8-K filed on June 27, 2023 and discussed in greater detail in Note 18 - Commitments and Contingencies , on June 21, 2023, Umpqua Bank was informed by one of its technology service providers (the “Vendor”) that a widely reported security incident involving MOVEit, a widely-used filesharing software, resulted in the unauthorized acquisition by a third party of the names and social security numbers or tax identification numbers of certain of Umpqua Bank’s consumer and small business customers.
As previously disclosed in the Company’s Current Report on Form 8-K filed on June 27, 2023 and discussed in greater detail in Note 16 – Commitments and Contingencies and Related-Party Transactions, on June 21, 2023, Umpqua Bank was informed by one of its technology service providers (the “Vendor”) that a widely reported security incident involving MOVEit, a widely-used filesharing software, resulted in the unauthorized acquisition by a third party of the names and social security numbers or tax identification numbers of certain of Umpqua Bank’s consumer and small business customers.
Our acquisitions, including our merger with UHC, may not have the anticipated positive results, including results relating to: correctly assessing the asset quality of the assets being acquired; the total cost of integration including management attention and resources; the time required to complete the integration successfully; the amount of longer-term cost savings; being able to profitably deploy funds acquired in an acquisition; or the overall performance of the combined entity.
Our acquisitions may not have the anticipated positive results, including results relating to: correctly assessing the asset quality of the assets being acquired; the total cost of integration including management attention and resources; the time required to complete the integration successfully; the amount of longer-term cost savings; being able to profitably deploy funds acquired in an acquisition; or the overall performance of the combined entity.
We or our third-party (or fourth-party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI present a number of risks and challenges to our business.
We or our third-party (or fourth-party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business.
If these conditions are more severe, the extent of the negative impact on our business and financial performance can increase and be more severe, including the adverse effects listed above and discussed throughout this “Risk Factors” section. Supply chain constraints, robust demand and labor shortages have led to persistent inflationary pressures throughout the economy.
If these conditions are more severe, the extent of the negative impact on our business and financial performance can increase and be more severe, including the adverse effects listed above and discussed throughout this “Risk Factors” section. In recent years, supply chain constraints, robust demand and labor shortages have led to persistent inflationary pressures throughout the economy.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. 29 Table of Contents Funding and Liquidity Risks Our management of capital could adversely affect profitability measures and the market price of our common stock and could dilute the holders of our outstanding common stock.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. Funding and Liquidity Risks Our management of capital could adversely affect profitability measures and the market price of our common stock and could dilute the holders of our outstanding common stock.
Substantially all of our loan and deposit customers are businesses and individuals in Washington, Oregon, Idaho, California and Nevada, and soft economies in these market areas could have a material adverse effect on our business, financial condition, results of operations and prospects.
Substantially all of our loan and deposit customers are businesses and individuals in Washington, Oregon, Idaho, California, Nevada, Utah, Arizona, and Colorado and soft economies in these market areas could have a material adverse effect on our business, financial condition, results of operations and prospects.
Regulatory approvals could be delayed, impeded, restrictively conditioned, or denied due to existing or new regulatory issues we have, or may have, with regulatory agencies. 24 Table of Contents Our ability to sustain or improve upon existing performance is dependent upon our ability to respond to technological change, and we may have fewer resources than some of our competitors to continue to invest in technological improvements.
Regulatory approvals could be delayed, impeded, restrictively conditioned, or denied due to existing or new regulatory issues we have, or may have, with regulatory agencies. 24 Table of Conte n t s Our ability to sustain or improve upon existing performance is dependent upon our ability to respond to technological change, and we may have fewer resources than some of our competitors to continue to invest in technological improvements.
There can be no assurance that we will be able to negotiate future acquisitions on terms acceptable to us. Conversely, there may be circumstances under which it would be prudent to consider alternatives for raising capital to take advantage of significant acquisition opportunities or in response to changing economic conditions.
There can be no assurance that we will be able to negotiate future acquisitions on terms acceptable to us. 28 Table of Conte n t s Conversely, there may be circumstances under which it would be prudent to consider alternatives for raising capital to take advantage of significant acquisition opportunities or in response to changing economic conditions.
A deterioration in the market areas we serve could result in consequences, including the following, any of which would have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects: • loan delinquencies may increase; • problem assets and foreclosures may increase; • collateral for loans made may decline in value, in turn reducing customers’ borrowing power, reducing the value of assets and collateral associated with existing loans; • certain securities within our investment portfolio could require an ACL, requiring a write-down through earnings to fair value, thereby reducing equity; • low-cost or noninterest-bearing deposits may decrease; and • demand for our loan and other products and services may decrease. 26 Table of Contents Concentrations within our loan portfolio could result in increased credit risk in a challenging economy.
A deterioration in the market areas we serve could result in consequences, including the following, any of which would have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects: • loan delinquencies may increase; • problem assets and foreclosures may increase; • collateral for loans made may decline in value, in turn reducing customers’ borrowing power, reducing the value of assets and collateral associated with existing loans; • certain securities within our investment portfolio could require an ACL, requiring a write-down through earnings to fair value, thereby reducing equity; • low-cost or non-interest-bearing deposits may decrease; and • demand for our loan and other products and services may decrease.
As of December 31, 2023, gross unrealized losses in our securities portfolio were $488.1 million. We may continue to observe declines in the fair market value of these securities. Securities issued by certain states and municipalities may come under scrutiny due to concerns about credit quality.
As of December 31, 2024, gross unrealized losses in our securities portfolio were $591.5 million. We may continue to observe declines in the fair market value of these securities. Securities issued by certain states and municipalities may come under scrutiny due to concerns about credit quality.
We may be required to expend significant additional resources in the future to modify and enhance our protective measures. Due to the complexity and interconnectedness of information technology systems, the process of enhancing our systems can itself create a risk of systems disruptions and security issues.
We may be required to expend significant additional resources in the future to modify and enhance our protective measures. 23 Table of Conte n t s Due to the complexity and interconnectedness of information technology systems, the process of enhancing our systems can itself create a risk of systems disruptions and security issues.
These unpredictable events could create, increase, or prolong economic and financial disruptions and volatility that adversely affect our business, financial condition, capital, and results of operations. Substantial competition in our market areas could adversely affect us. Commercial banking is a highly competitive business.
These unpredictable events could create, increase, or prolong economic and financial disruptions and volatility that adversely affect our business, financial condition, capital, and results of operations. 31 Table of Conte n t s Substantial competition in our market areas could adversely affect us. Commercial banking is a highly competitive business.
This could deprive our shareholders of opportunities to realize a premium for their Columbia common stock, even in circumstances where such action is favored by a majority of our shareholders.
This could deprive our shareholders of opportunities to realize a premium for their Columbia common stock, even in circumstances where such action is favored by a majority of our shareholders. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
Although we have historically declared cash dividends on our common stock, we are not required to do so and there may be circumstances under which we would eliminate our common stock dividend in the future. This could adversely affect the market price of our common stock.
Although we have historically declared cash dividends on our common stock, we are not required to do so and there may be circumstances under which we would eliminate our common stock dividend in the future.
Our articles of incorporation include certain provisions that could make it more difficult to acquire us by means of a tender offer, a proxy contest, merger or otherwise.
We have various anti-takeover measures that could impede a takeover. Our articles of incorporation include certain provisions that could make it more difficult to acquire us by means of a tender offer, a proxy contest, merger or otherwise.
Claims and legal actions, including supervisory or enforcement actions by our regulators, or criminal proceedings by prosecutorial authorities, could involve large monetary claims, including civil money penalties or fines imposed by government authorities and significant defense costs. Following the consummation of the merger with UHC, we are also subject to the claims and proceedings related to UHC’s operations.
We are from time to time subject to claims and proceedings related to our operations. Claims and legal actions, including supervisory or enforcement actions by our regulators, or criminal proceedings by prosecutorial authorities, could involve large monetary claims, including civil money penalties or fines imposed by government authorities and significant defense costs.
We utilize various techniques such as loan sales, workouts, and restructurings to manage our problem assets. Decreases in the value of these problem assets, the underlying collateral, or in the borrowers’ performance or financial condition would have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects.
Decreases in the value of these problem assets, the underlying collateral, or in the borrowers’ performance or financial condition would have an adverse impact, which could be material, on our business, financial condition, results of operations, and prospects.
In fact, the FDIC has issued pronouncements alerting banks of its concern about significant loan concentrations. Commercial real estate valuations can be materially affected over relatively short periods of time by changes in business climate, economic conditions, interest rates, and, in many cases, the results of operations of businesses and other occupants of the real property.
Commercial real estate valuations can be materially affected over relatively short periods of time by changes in business climate, economic conditions, interest rates, and, in many cases, the results of operations of businesses and other occupants of the real property.
Our ability to recover on defaulted loans would then be diminished, and we would be more likely to suffer losses on defaulted loans, any or all of which would have an adverse impact, which could be material, on our business, financial condition, results of operations and prospects.
Our ability to recover on defaulted loans would then be diminished, and we would be more likely to suffer losses on defaulted loans, any or all of which would have an adverse impact, which could be material, on our business, financial condition, results of operations, and prospects. 26 Table of Conte n t s Our allowance may not be adequate to cover future loan losses, which could adversely affect earnings.
We cannot accurately predict the full effects of recent legislation or the various other governmental, regulatory, monetary, and fiscal initiatives which have been and may be enacted on the financial markets, the Company, and the Bank.
Additionally, our business is affected significantly by the fiscal and monetary policies of the U.S. federal government and its agencies, including the Federal Reserve. We cannot accurately predict the full effects of recent legislation or the various other governmental, regulatory, monetary, and fiscal initiatives which have been and may be enacted on the financial markets, the Company, and the Bank.
The Company relies on bank deposits to be a low-cost and stable source of funding. The Company competes with banks and other financial services companies for deposits. Increases in short-term interest rates since March 2022 have resulted in and are expected to continue to result in more intense competition in deposit pricing.
The Company relies on bank deposits as a low-cost and stable funding source. Increases in short-term interest rates between March 2022 and July 2023 resulted in intense competition with banks and other financial services companies for deposits, causing the Company to increase the interest rates paid on deposits.
Our allowance may not be adequate to cover future loan losses, which could adversely affect earnings. We maintain an ACL in an amount that we believe is adequate to provide for losses inherent in our loan portfolio.
We maintain an ACL in an amount that we believe is adequate to provide for losses inherent in our loan portfolio.
Additionally, banking regulators, as an integral part of their supervisory function, periodically review our allowance. These regulatory agencies may require us to increase the allowance.
Additionally, banking regulators, as an integral part of their supervisory function, periodically review our allowance. These regulatory agencies may require us to increase the allowance. Any increase in the allowance would have an adverse effect, which could be material, on our financial condition and results of operations.
From time to time, the FASB and the SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can materially impact how we record and report our financial condition and results of operations.
From time to time, the FASB and the SEC change the financial accounting and reporting standards that govern the preparation of our financial statements.
Potential new regulations may require us to publicly disclose information about a cyberattack before the incident has been resolved or fully investigated. 23 Table of Contents The confidential information of our customers (including usernames and passwords) can also be jeopardized from the compromise of customers’ personal electronic devices or as a result of a data security breach at an unrelated company.
The confidential information of our customers (including usernames and passwords) can also be jeopardized from the compromise of customers’ personal electronic devices or as a result of a data security breach at an unrelated company.
During such time, damage related to a cyberattack may continue and communications to the public, customers, regulators, and other stakeholders may not be timely or accurate.
During such time, damage related to a cyberattack may continue and communications to the public, customers, regulators, and other stakeholders may not be timely or accurate. Potential new regulations may require us to publicly disclose information about a cyberattack before the incident has been resolved or fully investigated.
We rely on dividends and other payments from our bank for substantially all of our revenue. We are a separate and distinct legal entity from the Bank, and we receive substantially all of our operating cash flows from dividends and other payments from the Bank.
We are a separate and distinct legal entity from the Bank, and we receive substantially all of our operating cash flows from dividends and other payments from the Bank. These dividends and payments are the principal source of funds to pay dividends on our capital stock and interest and principal on any debt we may have.
We also face the risk of becoming subject to new or more stringent requirements in connection with the introduction of new regulations or modifications of existing regulations, which could require us to hold more capital or liquidity or have other adverse effects on our business or profitability. 31 Table of Contents Further, regulators have significant discretion and authority to prevent or remedy unsafe or unsound practices or violations of laws or regulations by financial institutions and holding companies in the performance of their supervisory and enforcement duties.
We also face the risk of becoming subject to new or more stringent requirements in connection with the introduction of new regulations or modifications of existing regulations, which could require us to hold more capital or liquidity or have other adverse effects on our business or profitability.
In addition, as a publicly traded company, we are subject to regulation by the SEC. Any change in applicable regulations or federal, state, or local legislation or in policies or interpretations or regulatory approaches to compliance and enforcement, income tax laws or accounting principles could have a substantial impact on us and our operations.
Any change in applicable regulations or federal, state, or local legislation or in policies or interpretations or regulatory approaches to compliance and enforcement, income tax laws, or accounting principles, including as a result of changes in U.S. presidential administrations or one or both houses of Congress and other factors, could have a substantial impact on us and our operations.
Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event the Bank is unable to pay dividends to us, we may not be able to service debt, pay obligations or pay dividends on our common stock.
Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to us. Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
Significant legal or regulatory actions could subject us to substantial uninsured liabilities and reputational harm and have a material adverse effect on our business and results of operations. We are from time to time subject to claims and proceedings related to our operations.
These changes can materially impact how we record and report our financial condition and results of operations. 30 Table of Conte n t s Significant legal or regulatory actions could subject us to substantial uninsured liabilities and reputational harm and have a material adverse effect on our business and results of operations.
Our business, reputation, and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient. 33 Table of Contents Our business is subject to the risks of pandemics, earthquakes, tsunamis, floods, fires and other natural catastrophic events and other events beyond our control.
Our business, reputation, and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient.
If a company does not return to compliance within 180 days, which period may be extended, the FRB may require divestiture of that company’s depository institutions.
If a company does not return to compliance within 180 days, which period may be extended, the FRB may require divestiture of that company’s depository institutions. To the extent we do not meet the requirements to be a financial holding company in the future, there could be a material adverse effect on our business, financial condition, and results of operations.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures. 25 Table of Contents In addition to our use of AI technologies, we are exposed to risks arising from the use of AI technologies by bad actors to commit fraud and misappropriate funds and to facilitate cyberattacks.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures.
Interest Rate and Credit Risks Economic conditions in the market areas we serve may adversely impact our earnings and could increase our credit risk associated with our loan portfolio, the value of our investment portfolio and the availability of deposits.
AI, if used to perpetrate fraud or launch cyberattacks, could create panic at a particular financial institution or exchange, which could pose a threat to financial stability. 25 Table of Conte n t s Interest Rate and Credit Risks Economic conditions in the market areas we serve may adversely impact our earnings and could increase our credit risk associated with our loan portfolio, the value of our investment portfolio and the availability of deposits.
The inability to receive dividends from the Bank could have a material adverse impact on our business, financial condition, results of operations and prospects. We have various anti-takeover measures that could impede a takeover.
In the event the Bank is unable to pay dividends to us, we may not be able to service debt, pay obligations or pay dividends on our common stock. The inability to receive dividends from the Bank could have a material adverse impact on our business, financial condition, results of operations, and prospects.
To the extent we do not meet the requirements to be a financial holding company in the future, there could be a material adverse effect on our business, financial condition, and results of operations. 32 Table of Contents Risks Relating to Markets and External Events National and global economic and other conditions could adversely affect our future results of operations or market price of our stock.
Risks Relating to Markets and External Events National and global economic and other conditions could adversely affect our future results of operations or market price of our stock.
Lower rates would continue to constrain our interest rate spread and adversely affect our business forecasts. We are unable to predict changes in interest rates, which are affected by factors beyond our control, including inflation, deflation, recession, unemployment, money supply and other changes in financial markets.
We are unable to predict changes in interest rates, which are affected by factors beyond our control, including inflation, deflation, recession, unemployment, money supply, and other changes in financial markets. 27 Table of Conte n t s Our business depends on our ability to successfully manage credit risk. The operation of our business requires us to manage credit risk.
The valuation of these foreclosed assets is periodically updated and resulting losses, if any, are charged to earnings in the period in which they are identified. An increase in the level of non-performing assets also increases our risk profile and may impact the capital levels our regulators believe is appropriate in light of such risks.
An increase in the level of non-performing assets also increases our risk profile and may impact the capital levels our regulators believe is appropriate in light of such risks. We utilize various techniques such as loan sales, workouts, and restructurings to manage our problem assets.
Any increase in the allowance would have an adverse effect, which could be material, on our financial condition and results of operations. 27 Table of Contents Non-performing assets take significant time to resolve and could adversely affect our results of operations and financial condition. Our non-performing assets adversely affect our net income in various ways.
Non-performing assets take significant time to resolve and could adversely affect our results of operations and financial condition. Our non-performing assets adversely affect our net income in various ways. We do not record interest income on non-accrual loans, thereby adversely affecting our income. Moreover, non-accrual loans increase our loan administration costs.
While our loan portfolio is diversified across business sectors, it is concentrated in commercial real estate and commercial business loans. These types of loans generally are viewed as having more risk of default than residential real estate loans or certain other types of loans or investments.
These types of loans generally are viewed as having more risk of default than residential real estate loans or certain other types of loans or investments. In fact, the FDIC has issued pronouncements alerting banks of its concern about significant loan concentrations.
If the Bank were to experience a significant outflow of deposits, the Company may face significantly increased funding costs, suffer significant losses and have a significantly reduced ability to raise new capital. The Company could lose access to sources of liquidity if it were to experience financial or regulatory issues.
The spread of information, including false rumors, through social media can exacerbate this risk. Significant deposit outflows could lead to higher funding costs, substantial losses, and a reduced ability to raise new capital. 29 Table of Conte n t s The Company could lose access to sources of liquidity if it were to experience financial or regulatory issues.
The Federal Reserve raised benchmark interest rates throughout 2023 and interest rates may remain elevated in response to economic conditions, particularly inflationary pressures. Increases in interest rates, to combat inflation or otherwise, may result in a change in the mix of noninterest and interest-bearing accounts, and may have otherwise unpredictable effects.
Alternatively, increases in interest rates may result in a change in the mix of non-interest and interest-bearing deposit accounts, and may have otherwise unpredictable effects.
Higher funding costs reduce the Company’s net interest margin and net interest income. 30 Table of Contents Checking and savings account balances and other forms of customer deposits may decrease when customers perceive alternative investments, such as the stock market, as providing a better risk-adjusted return.
This could force the Company to maintain higher than expected deposit interest rates to retain customers or rely on more expensive funding sources, which could impact funding costs and reduce net interest margin and income. Checking and savings account balances may decrease as customers perceive alternative investments, like the stock market, as offering better returns.
Removed
AI, if used to perpetrate fraud or launch cyberattacks, could create panic at a particular financial institution or exchange, which could pose a threat to financial stability. Risks Relating to our Merger with UHC Combining Columbia and UHC may be more difficult, costly, or time-consuming than expected, and Columbia may fail to realize the anticipated benefits of the Merger.
Added
In addition to our use of AI technologies, we are exposed to risks arising from the use of AI technologies by bad actors to commit fraud and misappropriate funds and to facilitate cyberattacks.
Removed
The success of the Merger, which closed in early 2023, depends, in part, on the ability to realize the anticipated cost savings from combining the businesses of Columbia and UHC.
Added
We are focusing on growth opportunities in California, Arizona, Colorado, and Utah; however, economic softening in these areas could hinder our expansion plans.
Removed
To realize the anticipated benefits and cost savings from the Merger, Columbia and UHC must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized without adversely affecting current revenues and future growth.
Added
Concentrations within our loan portfolio could result in increased credit risk in a challenging economy. While our loan portfolio is diversified across business sectors, it is concentrated in commercial real estate and commercial business loans.
Removed
If we are not able to successfully achieve these objectives, the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the Merger could be less than anticipated, and integration may result in additional and unforeseen expenses.
Added
Assets acquired by foreclosure or similar proceedings are recorded at fair value less estimated costs to sell. The valuation of these foreclosed assets is periodically updated and resulting losses, if any, are charged to earnings in the period in which they are identified.
Removed
While Columbia has realized $143 million in annualized cost-savings due to the merger as of December 31, 2023, exceeding its original $135 million target, an inability to maintain the full extent of these cost savings following the Merger, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the combined company, which may adversely affect the value of our common stock.
Added
Although the Federal Reserve began decreasing the federal funds target rate during 2024 and short-term interest rates are expected to continue decreasing during 2025, interest rates may increase to combat inflation or otherwise. Lower rates could reduce our interest income and adversely affect our business forecasts.
Removed
It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures, and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors, and employees or to achieve the anticipated benefits and cost savings of the Merger.
Added
Rate fluctuations are unpredictable and can adversely impact our ability to maintain consistently low cost funding.
Removed
Integration efforts between the companies may also divert management attention and resources. These integration matters could have an adverse effect on the combined company for an undetermined period after completion of the Merger. The Company may be unable to retain legacy personnel successfully.
Added
In September 2024, the Federal Reserve reduced the federal funds rate, starting the current cycle of declining short-term interest rates. A lowering interest rate environment could also impact the Company. Lower interest rates may reduce the attractiveness of deposits, leading customers to seek higher returns elsewhere.
Removed
The success of the Merger will depend in part on the Company’s ability to retain the talents and dedication of key employees. It is possible that these employees, including key employees, may decide not to remain with the Company.
Added
This shift could increase the Company’s funding costs and reduce net interest income. Additionally, mass withdrawals of deposits, as seen in certain bank failures in 2023, could be triggered by losses in investment portfolios or concerns about uninsured deposits. Technological advancements and changes in banking relationships, such as customers maintaining accounts at multiple banks, facilitate rapid deposit movements.
Removed
If the Company is unable to retain key employees, including management, who are critical to the successful future operations of the combined company, the Company could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
Added
In addition, as a publicly traded company, we are subject to regulation by the SEC.
Removed
If key employees terminate their employment, the Company’s business activities may be adversely affected and the Company may not be able to locate or retain suitable replacements.
Added
The possible economic policies of the new U.S. presidential administration, including those already imposed and additional tariffs that may be imposed or increased tariffs on U.S. trading partners, may also lead to continued or renewed inflationary pressures.
Removed
We do not record interest income on non-accrual loans, thereby adversely affecting our income. Moreover, non-accrual loans increase our loan administration costs. Assets acquired by foreclosure or similar proceedings are recorded at fair value less estimated costs to sell.
Added
In addition, due to divergent stakeholder views regarding climate change, we are at increased risk that any actual or perceived action, or lack thereof, by us in connection with the transition to a less carbon-dependent economy will be perceived negatively by some stakeholders and adversely affect our business and reputation.
Removed
Reform of interest rate benchmarks and the use of alternative reference rates by us and our clients could adversely affect our business, financial condition, and results of operations. Certain alternative reference rates appear to have gained acceptance among market participants as benchmarks in debt securities, loans, and other financial instruments.
Added
Our business is subject to the risks of pandemics, earthquakes, tsunamis, floods, fires and other natural catastrophic events and other events beyond our control.
Removed
However, interest rate benchmark reforms may have unexpected adverse consequences that could be contrary to market expectations. Alternative reference rates may be based upon indices, and may have characteristics, different from the benchmarks they replace. In some cases, financial instruments may perform less predictably after alternative reference rates have replaced the original benchmarks.
Added
This could adversely affect the market price of our common stock. 32 Table of Conte n t s We rely on dividends and other payments from our bank for substantially all of our revenue.
Removed
Further, given the limited performance and historical data of new alternative rates, there can be no assurance that: (i) any of the new rates will be similar to, perform the same as, produce the economic equivalent of, or be an adequate substitute for the benchmarks that they replace; or (ii) any particular use of hedges will be effective. 28 Table of Contents In addition, we may be adversely impacted by the use of alternative reference rates as a result of our business activities and our underlying operations.
Removed
We utilize reference rates in a variety of agreements and instruments and are responsible for the use of reference rates in a variety of capacities, as well as in our operational functions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo help us preserve the availability of critical data and systems, maintain regulatory compliance, and achieve our goal of managing our material risks from cybersecurity threats, and with an aim to protect against, detect, and respond to cybersecurity incidents, as such term is defined in Item 106(a) of Regulation S-K, we undertake the below listed activities: • Closely monitor emerging data protection laws and implement changes to our processes designed to comply with such data protection laws; • Undertake regular reviews of our policies and standards related to cybersecurity; • Proactively inform our customers of substantive changes related to customer data handling; • Conduct annual customer data handling and use requirements training for associates; • Conduct annual cybersecurity management and incident training for associates involved in our systems and processes that handle sensitive data; • Conduct regular cybersecurity training and awareness for all associates and all contractors with access to corporate systems; • Through policy, practice, and contract (as applicable) require associates, as well as third-parties who provide services on our behalf, to treat customer information and data with care; • Run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • Leverage the NIST incident handling framework to help us identify, protect, detect, respond, and recover when there is an actual or potential cybersecurity incident; and • Maintain what we believe to be customary and appropriate third-party information security coverage for incident loss mitigation. 35 Table of Contents We also maintain an incident response plan designed to coordinate the activities we take with a goal to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
Biggest changeThese standards are aligned to the National Institute of Standards and Technology (“NIST”), International Organization for Standardization, Center for Internet Security, and experts are engaged by us to evaluate the integrity of our information systems, as such term is defined in Item 106(a) of Regulation S-K. 33 Table of Conte n t s To help us preserve the availability of critical data and systems, maintain regulatory compliance, and achieve our goal of managing our material risks from cybersecurity threats, and with an aim to protect against, detect, and respond to cybersecurity incidents, as such term is defined in Item 106(a) of Regulation S-K, we undertake the below listed activities: • Closely monitor emerging data protection laws and implement changes to our processes designed to comply with such data protection laws; • Undertake regular reviews of our policies and standards related to cybersecurity; • Proactively inform our customers of substantive changes related to customer data handling; • Conduct annual customer data handling and use requirements training for associates; • Conduct annual cybersecurity management and incident training for associates involved in our systems and processes that handle sensitive data; • Conduct regular cybersecurity training and awareness for all associates and all contractors with access to corporate systems; • Through policy, practice, and contract (as applicable) require associates, as well as third-parties who provide services on our behalf, to treat customer information and data with care; • Run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; • Leverage the NIST incident handling framework to help us identify, protect, detect, respond, and recover when there is an actual or potential cybersecurity incident; and • Maintain what we believe to be customary and appropriate third-party information security coverage for incident loss mitigation.
In such sessions, the ERMC generally receives materials including a cybersecurity scorecard and other materials indicating current and emerging cybersecurity threat risks, and describing the Company’s ability to mitigate those risks, and discusses such matters with our Chief Information Security Officer, Chief Information Officer, and Chief Privacy and Information Risk Officer.
In such sessions, the ERMC generally receives materials indicating current and emerging cybersecurity threat risks, and describing the Company’s ability to mitigate those risks, and discusses such matters with our Chief Information Security Officer, Chief Information Officer, and Chief Privacy and Information Risk Officer.
As discussed above, these members of management report to the ERMC about cybersecurity threat risks, among other cybersecurity related matters, at least annually. 37 Table of Contents
As discussed above, these members of management report to the ERMC about cybersecurity threat risks, among other cybersecurity related matters, at least annually.
We believe that if one or more outcomes that are determined in favor of the plaintiffs in the litigation arising from the Vendor Incident it could have a material adverse effect on our business, operations, or financial results. Separately and as previously disclosed, Umpqua Bank experienced an on-premises MOVEit security incident in May 2023.
We believe that if one or more outcomes that are determined in favor of the plaintiffs in the litigation arising from the Vendor Incident it could have a material adverse effect on our business, operations, or financial results.
Our Board of Director’s Enterprise Risk Management Committee (the "ERMC") is responsible for the oversight of risks from cybersecurity threats.
Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management. Our Board of Director’s Enterprise Risk Management Committee (the "ERMC") is responsible for the oversight of risks from cybersecurity threats.
Material cybersecurity threat risks are also considered during separate Board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
Material cybersecurity threat risks are also considered during separate Board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters. Additionally, the Disclosure Committee periodically receives reports on cybersecurity threat risks to ensure that required disclosures are accurate and timely.
In August 2023, the Vendor, on behalf of Umpqua Bank, also sent notice via U.S. mail to the 429,252 Umpqua Bank customers whose information was involved in the Vendor Incident. 36 Table of Contents As previously disclosed, beginning on August 18, 2023, some of the notified individuals filed lawsuits against Umpqua Bank in various federal and state courts seeking monetary recovery and other relief on behalf of themselves and one or more putative classes of other individuals similarly situated.
As previously disclosed, beginning on August 18, 2023, some of the notified individuals filed lawsuits against Umpqua Bank in various federal and state courts seeking monetary recovery and other relief on behalf of themselves and one or more putative classes of other individuals similarly situated.
Failures, interruptions, or data breaches involving our information systems, or the information systems of our vendors, could damage our reputation, result in a loss of customer business, result in a violation of privacy or other laws, or expose us to civil litigation, regulatory fines or losses not covered by insurance, all of which could have a material adverse impact on our business, financial condition, results of operations and prospects.
Failures, interruptions, or data breaches involving our information systems, or the information systems of our vendors, could damage our reputation, result in a loss of customer business, result in a violation of privacy or other laws, or expose us to civil litigation, regulatory fines or losses not covered by insurance, all of which could have a material adverse impact on our business, financial condition, results of operations, and prospects. 34 Table of Conte n t s As of the date of this Annual Report on Form 10-K, we do not believe that any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
These members of management are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan.
They also have several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, Certified Information Systems Security Professional, Global Information Assurance Certification, and Certified Professional Hacker. 35 Table of Conte n t s These members of management are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan.
Removed
These standards are aligned to the National Institute of Standards and Technology (“NIST”), International Organization for Standardization, Center for Internet Security, and experts are engaged by us to evaluate the integrity of our information systems, as such term is defined in Item 106(a) of Regulation S-K.
Added
We also maintain an incident response plan designed to coordinate the activities we take with a goal to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
Removed
As of the date of this Annual Report on Form 10-K, we do not believe that any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. The expenses we have incurred from cybersecurity incidents, including the Vendor Incident have been immaterial to date.
Added
The expenses we have incurred from cybersecurity incidents, including the Vendor Incident have been immaterial to date.
Removed
The on-premises instance was removed from the network immediately and decommissioned, and the unauthorized actor did not obtain any customer information or Umpqua Bank data. An independent forensics firm was engaged and confirmed our assessment of this on-premises MOVEit incident, which did not cause any interruption of business operations.
Added
In August 2023, the Vendor, on behalf of Umpqua Bank, also sent notice via U.S. mail to the 429,252 Umpqua Bank customers whose information was involved in the Vendor Incident.
Removed
We do not currently believe the on-premises incident will have a material adverse effect on our business, operations, or financial results. Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management.
Removed
They also have several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, Certified Information Systems Security Professional, Global Information Assurance Certification, and Certified Professional Hacker.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, the Company had the following properties located throughout several counties in Oregon, Washington, California, Idaho, Nevada, Colorado, Arizona, and Utah: Owned Properties Leased Properties Total Properties Customer-facing locations 169 149 318 Administrative locations 7 23 30 Total locations 176 172 348
Biggest changeAs of December 31, 2024, the Company had the following properties located throughout several counties in Oregon, Washington, California, Idaho, Nevada, Colorado, Arizona, and Utah: Owned Properties Leased Properties Total Properties Customer-facing locations 168 146 314 Administrative locations 6 9 15 Total locations 174 155 329
ITEM 2. PROPERTIES. The Company’s principal properties include our corporate headquarters which is located at 13th & A Street, Tacoma, Washington and leased corporate office space in Lake Oswego, Oregon.
ITEM 2. PROPERTIES. The Company’s principal properties include our leased corporate headquarters which is located at 13th & A Street, Tacoma, Washington and leased corporate office space in Lake Oswego, Oregon.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(c) The following table provides information about repurchases of common stock by the Company during the quarter ended December 31, 2023: Period Total number of Common Shares Purchased (1) Average Price Paid per Common Share Total Number of Shares Purchased as Part of Publicly Announced Plan (2) Maximum Dollar Value of Shares that May be Purchased at Period End under the Plan 10/01/23 - 10/31/23 8,142 $ 19.56 — $ — 11/01/23 - 11/30/23 301 $ 20.52 — $ — 12/01/23 - 12/31/23 364 $ 27.18 — $ — Total for quarter 8,807 $ 19.90 — (1) Common shares repurchased by the Company during the quarter consist of cancellation of 8,807 shares to be issued upon vesting of restricted stock to pay withholding taxes.
Biggest change(c) The following table provides information about repurchases of common stock by the Company during the quarter ended December 31, 2024: Period Total number of Common Shares Purchased (1) Average Price Paid per Common Share Total Number of Shares Purchased as Part of Publicly Announced Plan (2) Maximum Dollar Value of Shares that May be Purchased at Period End under the Plan 10/01/24 - 10/31/24 837 $ 28.62 — $ — 11/01/24 - 11/30/24 232 $ 29.13 — $ — 12/01/24 - 12/31/24 1,688 $ 29.50 — $ — Total for quarter 2,757 $ 29.20 — (1) Common shares repurchased by the Company during the quarter consist of cancellation of 2,757 shares to be issued upon vesting of restricted stock to pay withholding taxes.
During the three months ended December 31, 2023, no shares were repurchased pursuant to the Company's publicly announced corporate stock repurchase plan described in (2) below. (2) As of December 31, 2023, the Company does not have a current share repurchase authorization from the Board of Directors.
During the three months ended December 31, 2024, no shares were repurchased pursuant to the Company's publicly announced corporate stock repurchase plan described in (2) below. (2) As of December 31, 2024, the Company does not have a current share repurchase authorization from the Board of Directors.
This comparison assumes $100.00 was invested on December 31, 2018, in our common stock and the comparison indices, and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends.
This comparison assumes $100.00 was invested on December 31, 2019, in our common stock and the comparison indices, and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends.
(a) Our common stock is traded on the Nasdaq Stock Market LLC under the symbol "COLB." As of December 31, 2023, our common stock was held by 5,345 shareholders of record, a number that does not include beneficial owners who hold shares in "street name," or shareholders from previously acquired companies that have not exchanged their stock.
(a) Our common stock is traded on the Nasdaq Stock Market LLC under the symbol "COLB." As of December 31, 2024, our common stock was held by 5,196 shareholders of record, a number that does not include beneficial owners who hold shares in "street name," or shareholders from previously acquired companies that have not exchanged their stock.
Information relating to compensation plans under which the Company's equity securities are authorized for issuance is set forth in "Part III—Item 12" of this Annual Report on Form 10-K. 39 Table of Contents Stock Performance Graph The following chart, which is furnished as part of our annual report to shareholders and not filed, compares the yearly percentage changes in the cumulative shareholder return on our common stock during the five fiscal years ended December 31, 2023, with (i) the Nasdaq Composite Index, (ii) the Standard and Poor's 500 Index and (iii) the Nasdaq Bank Index.
Information relating to compensation plans under which the Company's equity securities are authorized for issuance is set forth in "Part III—Item 12" of this Annual Report on Form 10-K. 37 Table of Conte n t s Stock Performance Graph The following chart, which is furnished as part of our annual report to shareholders and not filed, compares the yearly percentage changes in the cumulative shareholder return on our common stock during the five fiscal years ended December 31, 2024, with (i) the Nasdaq Composite Index, (ii) the Standard and Poor's 500 Index, and (iii) the Nasdaq Bank Index.
As of December 31, 2023, a total of 1.7 million shares of unvested restricted stock units and awards were outstanding. The payment of future cash dividends is at the discretion of our Board and subject to a number of factors, including results of operations, general business conditions, growth, financial condition, and other factors deemed relevant by the Board.
As of December 31, 2024, a total of 2.3 million shares of unvested restricted stock units and awards were outstanding. The payment of future cash dividends is at the discretion of our Board and subject to a number of factors, including results of operations, general business conditions, growth, financial condition, and other factors deemed relevant by the Board.
Price information from December 31, 2018 to December 31, 2023, was obtained by using the closing prices as of the last trading day of each year.
Price information from December 31, 2019 to December 31, 2024, was obtained by using the closing prices as of the last trading day of each year.
Restricted shares cancelled to pay withholding taxes totaled 261,000 and 120,000 shares during the years ended December 31, 2023 and 2022, respectively.
Restricted shares cancelled to pay withholding taxes totaled 285,000 and 261,000 shares during the years ended December 31, 2024 and 2023, respectively.
Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Supervision and Regulation section in Item 1 above. (b) Not applicable.
Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Supervision and Regulation section in Item 1 of this Annual Report on Form 10-K. (b) Not applicable.
Removed
Period Ending 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Columbia Banking System, Inc. $100.00 $116.40 $107.37 $100.78 $96.48 $90.78 Nasdaq Composite Index $100.00 $136.73 $198.33 $242.38 $163.58 $236.70 S&P 500 Index $100.00 $131.47 $155.65 $200.29 $163.98 $207.04 Nasdaq Bank Index $100.00 $124.38 $115.04 $164.41 $137.65 $132.92 ITEM 6. RESERVED 40 Table of Contents
Added
Period Ending 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Columbia Banking System, Inc. $100.00 $92.24 $86.58 $82.88 $77.99 $84.22 Nasdaq Composite Index $100.00 $145.05 $177.27 $119.63 $173.11 $224.34 S&P 500 Index $100.00 $118.39 $153.34 $124.73 $157.48 $196.85 Nasdaq Bank Index $100.00 $92.50 $132.19 $110.67 $106.87 $128.85

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table shows the activity in the ACL for the years ended December 31, 2023 and 2022: (dollars in thousands) 2023 2022 Allowance for credit losses on loans and leases Balance, beginning of period $ 301,135 $ 248,412 Initial ACL recorded for PCD loans acquired during the period 26,492 — Provision for credit losses on loans and leases (1) 209,979 83,605 Charge-offs: Commercial real estate, net (803) (136) Commercial, net (109,862) (41,073) Residential, net (547) (224) Consumer & other, net (5,762) (3,556) Total loans charged-off (116,974) (44,989) Recoveries: Commercial real estate, net 333 384 Commercial, net 16,884 11,029 Residential, net 1,123 662 Consumer & other, net 1,899 2,032 Total recoveries 20,239 14,107 Net (charge-offs) recoveries: Commercial real estate, net (470) 248 Commercial, net (92,978) (30,044) Residential, net 576 438 Consumer & other, net (3,863) (1,524) Total net charge-offs (96,735) (30,882) Balance, end of period $ 440,871 $ 301,135 Reserve for unfunded commitments Balance, beginning of period $ 14,221 $ 12,767 Initial ACL recorded for unfunded commitments acquired during the period 5,767 — Provision for credit losses on unfunded commitments 3,220 1,454 Balance, end of period 23,208 14,221 Total allowance for credit losses $ 464,079 $ 315,356 As a percentage of average loans and leases (annualized): Net charge-offs 0.27 % 0.13 % Commercial real estate, net — % — % Commercial, net 1.04 % 0.56 % Residential, net (0.01) % (0.01) % Consumer & other, net 1.93 % 0.90 % Provision for credit losses 0.60 % 0.35 % Recoveries as a percentage of charge-offs 17.30 % 31.36 % (1) For the year ended December 31, 2023, the provision for credit losses on loans and leases includes $88.4 million initial provision related to non-PCD loans acquired during the period.
Biggest changeThe following table shows the activity in the ACL for the years ended December 31, 2024 and 2023: (dollars in thousands) 2024 2023 Allowance for credit losses on loans and leases Balance, beginning of period $ 440,871 $ 301,135 Initial ACL recorded for PCD loans acquired during the period — 26,492 Provision for credit losses on loans and leases (1) 112,964 209,979 Charge-offs: Commercial real estate, net (3,681) (803) Commercial, net (139,218) (109,862) Residential, net (1,956) (547) Consumer & other, net (6,339) (5,762) Total loans charged-off (151,194) (116,974) Recoveries: Commercial real estate, net 956 333 Commercial, net 18,292 16,884 Residential, net 887 1,123 Consumer & other, net 1,853 1,899 Total recoveries 21,988 20,239 Net (charge-offs) recoveries: Commercial real estate, net (2,725) (470) Commercial, net (120,926) (92,978) Residential, net (1,069) 576 Consumer & other, net (4,486) (3,863) Total net charge-offs (129,206) (96,735) Balance, end of period $ 424,629 $ 440,871 Reserve for unfunded commitments Balance, beginning of period $ 23,208 $ 14,221 Initial ACL recorded for unfunded commitments acquired during the period — 5,767 (Recapture) provision for credit losses on unfunded commitments (7,040) 3,220 Balance, end of period 16,168 23,208 Total allowance for credit losses $ 440,797 $ 464,079 As a percentage of average loans and leases (annualized): Net charge-offs 0.34 % 0.27 % Commercial real estate, net 0.01 % — % Commercial, net 1.24 % 1.04 % Residential, net 0.01 % (0.01) % Consumer & other, net 2.13 % 1.93 % Provision for credit losses 0.28 % 0.60 % Recoveries as a percentage of charge-offs 14.54 % 17.30 % (1) For the year ended December 31, 2023, the provision for credit losses on loans and leases includes $88.4 million initial provision related to non-PCD loans acquired during the period. 58 Table of Conte n t s The following table shows the change in the ACL from December 31, 2024 to December 31, 2023: (dollars in thousands) December 31, 2023 2024 net (charge-offs) recoveries Reserve build December 31, 2024 % of loans and leases outstanding Commercial real estate $ 137,058 $ (2,725) $ 26,012 $ 160,345 0.82 % Commercial 252,662 (120,926) 93,867 225,603 2.26 % Residential 64,944 (1,069) (17,091) 46,784 0.59 % Consumer & other 9,415 (4,486) 3,136 8,065 4.48 % Total allowance for credit losses $ 464,079 $ (129,206) $ 105,924 $ 440,797 1.17 % % of loans and leases outstanding 1.24 % 1.17 % To calculate the ACL, the CECL models use a forecast of future economic conditions and are dependent upon specific macroeconomic variables that are relevant to each of the Bank's loan and lease portfolios, as well as qualitative factors to address uncertainty not measured within the quantitative analysis.
Although a minimum leverage ratio of 4% is required for the highest-rated financial holding companies that are not undertaking significant expansion programs, the Federal Reserve Board may require a financial holding company to maintain a leverage ratio greater than 4% if it is experiencing or anticipating significant growth or is operating with less than well-diversified risks in the opinion of the Federal Reserve Board.
Although a minimum leverage ratio of 4% is required for the highest-rated financial holding companies that are not undertaking significant expansion programs, the Federal Reserve may require a financial holding company to maintain a leverage ratio greater than 4% if it is experiencing or anticipating significant growth or is operating with less than well-diversified risks in the opinion of the Federal Reserve.
Commitments and Other Contractual Obligation s - The Company participates in many different contractual arrangements which may or may not be recorded on its balance sheet, under which the Company has an obligation to pay certain amounts, provide credit or liquidity enhancements, or provide market risk support. Our material contractual obligations are primarily for time deposits and borrowings.
Commitments and Other Contractual Obligation s - The Company participates in many different contractual arrangements which may or may not be recorded on its balance sheet, under which the Company has an obligation to pay certain amounts, provide credit or liquidity enhancements, or provide market risk support. Our material contractual obligations are primarily for time deposits, borrowings, and subordinated debentures.
We monitor the sources and uses of funds daily to maintain an acceptable liquidity position. One source of funds includes public deposits. Individual state laws require banks to collateralize public deposits, typically as a percentage of their public deposit balance in excess of FDIC insurance. Public deposits represented 7% of total deposits at both December 31, 2023 and 2022.
We monitor the sources and uses of funds daily to maintain an acceptable liquidity position. One source of funds includes public deposits. Individual state laws require banks to collateralize public deposits, typically as a percentage of their public deposit balance in excess of FDIC insurance. Public deposits represented 7% of total deposits at both December 31, 2024 and 2023.
The following discussion and analysis of our financial condition and results of operations constitutes management's review of the factors that affected our financial and operating performance for the years ended December 31, 2023 and 2022. This discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere in this Annual Report on Form 10-K.
The following discussion and analysis of our financial condition and results of operations constitutes management's review of the factors that affected our financial and operating performance for the years ended December 31, 2024 and 2023. This discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere in this Annual Report on Form 10-K.
As part of a business acquisition, the fair value of identifiable intangible assets such as core deposits, which includes all deposits except certificates of deposit, was recognized at the Merger Date. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives.
As part of a business combination, the fair value of identifiable intangible assets such as core deposits, which includes all deposits except certificates of deposit, was recognized at the acquisition date. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives.
The Company elected this capital relief and delayed the estimated regulatory capital impact of adopting CECL, relative to the incurred loss methodology's effect on regulatory capital. As of December 31, 2023, all four of the capital ratios of the Bank exceeded the minimum ratios required by federal regulation.
The Company elected this capital relief and delayed the estimated regulatory capital impact of adopting CECL, relative to the incurred loss methodology's effect on regulatory capital. As of December 31, 2024, all four of the capital ratios of the Bank exceeded the minimum ratios required by federal regulation.
The following table presents the return on average assets (GAAP), average common shareholders' equity (GAAP), and average tangible common shareholders' equity (non-GAAP) for the years ended December 31, 2023, 2022, and 2021. For each period presented, the table includes the calculated ratios based on reported net income.
The following table presents the return on average assets (GAAP), average common shareholders' equity (GAAP), and average tangible common shareholders' equity (non-GAAP) for the years ended December 31, 2024, 2023, and 2022. For each period presented, the table includes the calculated ratios based on reported net income.
As of December 31, 2023, the Company and Bank were in compliance with the capital conservation buffer requirements. As of December 31, 2023, the most recent notification from the FDIC categorized the Bank as "well-capitalized" under the regulatory framework for prompt corrective action.
As of December 31, 2024, the Company and Bank were in compliance with the capital conservation buffer requirements. As of December 31, 2024, the most recent notification from the FDIC categorized the Bank as "well-capitalized" under the regulatory framework for prompt corrective action.
As of December 31, 2023 , we determined there were no events or circumstances which would more likely than not reduce the fair value of our reporting unit below its carrying amount.
As of December 31, 2024 , we determined there were no events or circumstances which would more likely than not reduce the fair value of our reporting unit below its carrying amount.
Management monitors these ratios on a regular basis to ensure that the Bank remains within regulatory guidelines. 66 Table of Contents The Company's dividend policy considers, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis.
Management monitors these ratios on a regular basis to ensure that the Bank remains within regulatory guidelines. The Company's dividend policy considers, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis.
These risk-based capital guidelines take into consideration risk factors, as defined by regulation, associated with various categories of assets, both on and off-balance sheet. Refer to the discussion of the capital adequacy requirements in Supervision and Regulatio n in Item 1 of this 10-K.
These risk-based capital guidelines take into consideration risk factors, as defined by regulation, associated with various categories of assets, both on and off-balance sheet. Refer to the discussion of the capital adequacy requirements in Supervision and Regulatio n in Item 1 of this Annual Report on Form 10-K.
The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. The common equity Tier 1, Tier 1, and total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%, respectively.
The capital conservation buffer is exclusively comprised of CET1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. The CET1, Tier 1, and total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%, respectively.
As of December 31, 2023, the Company does not have a share repurchase authorization from its Board of Directors. The Company did not repurchase any shares during either 2023 or 2022.
As of December 31, 2024, the Company does not have a share repurchase authorization from its Board. The Company did not repurchase any shares during either 2024 or 2023.
The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the years ended December 31, 2023, 2022, and 2021: 2023 2022 2021 Dividend declared per common share (1) $ 1.43 $ 1.40 $ 1.40 Dividend payout ratio 80 % 54 % 44 % (1) Periods prior to February 28, 2023 have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the Merger of 0.5958.
The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the years ended December 31, 2024, 2023, and 2022: 2024 2023 2022 Dividend declared per common share (1) $ 1.44 $ 1.43 $ 1.40 Dividend payout ratio 56 % 80 % 54 % (1) Periods prior to February 28, 2023 were restated in 2023 as a result of the adjustment to common shares outstanding based on the exchange ratio from the Merger of 0.5958.
The following tables present the par value, amortized cost, unrealized gains, unrealized losses, and approximate fair values of debt securities as available for sale and held to maturity investment debt securities portfolio by major type as of the dates presented: December 31, 2023 (dollars in thousands) Current Par Amortized Cost Unrealized Gains Unrealized Losses Fair Value % of Portfolio Available for sale: U.S.
The following tables present the par value, amortized cost, and fair values of debt securities as available for sale and held to maturity investment debt securities portfolio by major type as of the dates presented: December 31, 2024 December 31, 2023 (dollars in thousands) Current Par Amortized Cost Fair Value % of Portfolio Current Par Amortized Cost Fair Value % of Portfolio Available for sale: U.S.
Our CET1 capital primarily includes shareholders' equity less certain deductions for goodwill and other intangibles, net of taxes, net unrealized gains (losses) on AFS securities, net of tax, net unrealized gains (losses) related to fair value of liabilities, net of tax, and certain deferred tax assets that arise from tax loss and credit carry-forwards, and totaled $3.9 billion as of December 31, 2023.
Our CET1 capital primarily includes shareholders' equity less certain deductions for goodwill and other intangibles, net of taxes, net unrealized gains (losses) on AFS securities, net of tax, net unrealized gains (losses) related to fair value of liabilities, net of tax, and certain deferred tax assets that arise from tax loss and credit carry-forwards, and totaled $4.2 billion as of December 31, 2024.
Substantially all of the Company's revenues are obtained from dividends declared and paid by the Bank. There were $353.0 million of dividends paid by the Bank to the Company in 2023. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Company.
Substantially all of the Company's revenues are obtained from dividends declared and paid by the Bank. There were $360.0 million of dividends paid by the Bank to the Company in 2024. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Company.
Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary market areas in particular, could have an adverse impact on the repayment of these loans.
Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax and rent control policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary geographic footprint in particular, could have an adverse impact on the repayment of these loans.
Since the Federal Reserve ceased increasing the federal funds rate, we have experienced an increase in our funding costs that outpaces the increase in our earning asset yields as our deposits have continued to reprice higher and our funding base has experienced a shift toward higher-cost sources as Federal Reserve actions have reduced available liquidity within the banking industry.
After the Federal Reserve ceased increasing the federal funds rate, we experienced an increase in our funding costs that outpaced the increase in our earning asset yields, as our deposits continued to reprice higher and our funding base experienced a shift toward higher-cost sources as Federal Reserve actions reduced available liquidity within the banking industry.
FDIC and Oregon Division of Financial Regulation approval is required for quarterly dividends from Umpqua Bank to the Company. Although we expect the Bank's and the Company's liquidity positions to remain satisfactory during 2024, it is possible that our deposit balances may not be maintained at previous levels due to pricing pressure or customers' behavior in the current economic environment.
FDIC and Oregon Division of Financial Regulation approval is required for quarterly dividends from the Bank to the Company. 62 Table of Conte n t s Although we expect the Bank's and the Company's liquidity positions to remain satisfactory during 2025, it is possible that our deposit balances may not be maintained at previous levels due to pricing pressure or customers' behavior in the current economic environment.
Actual results could differ significantly from those estimates. The consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry, in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.
The consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry, in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.
Tier 1 capital is primarily comprised of common equity Tier 1 capital, less certain additional deductions applied during the phase-in period, and totaled $3.9 billion as of December 31, 2023. Tier 2 capital components include all, or a portion of, the ACL in excess of Tier 1 statutory limits and combined trust preferred security debt issuances.
Tier 1 capital is primarily comprised of CET1 capital, less certain additional deductions applied during the phase-in period, and totaled $4.2 billion as of December 31, 2024. Tier 2 capital components include all, or a portion of, the ACL in excess of Tier 1 statutory limits and combined trust preferred security debt issuances.
The amount of such adjustment was an addition to recorded income of approximately $4.1 million, $1.3 million, and $1.5 million for the years ended December 31, 2023, 2022, and 2021, respectively. 49 Table of Contents The following table sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for 2023 compared to 2022, as well as between 2022 and 2021.
The amount of such adjustment was an addition to recorded income of approximately $4.0 million, $4.1 million, and $1.3 million for the years ended December 31, 2024, 2023, and 2022, respectively. 46 Table of Conte n t s The following table sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for 2024 compared to 2023, as well as between 2023 and 2022.
(2) Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.
(2) Tax-exempt income was adjusted to a tax equivalent basis at a 21% tax rate.
The fair value of the MSR asset decreased by $17.7 million due to the passage of time, including the impact of regularly scheduled repayments, paydowns, and payoffs, as compared to a decrease of $20.3 million in 2022.
The fair value of the MSR asset decreased by $12.6 million in 2024 due to the passage of time, including the impact of regularly scheduled repayments, paydowns, and payoffs, as compared to a decrease of $17.7 million in 2023.
The total of Tier 1 capital plus Tier 2 capital components is referred to as Total Risk-Based Capital and was $4.8 billion as of December 31, 2023.
The total of Tier 1 capital plus Tier 2 capital components is referred to as Total Risk-Based Capital and was $5.1 billion as of December 31, 2024.
In addition, our stock plans provide that award holders may pay for the exercise price and tax withholdings in part or entirely by tendering previously held shares. 67 Table of Contents
In addition, our stock plans provide that award holders may pay for the exercise price and tax withholdings in part or entirely by tendering previously held shares. 64 Table of Conte n t s
The Bank's liquidity strategy includes maintaining a sufficient on-balance sheet liquidity position to provide flexibility, to grow deposit balances and fund growth in lending and investment portfolios, as well as to deleverage non-deposit liabilities as economic conditions permit.
The Bank's liquidity strategy includes maintaining sufficient on-balance sheet liquidity to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage non-deposit liabilities as economic conditions permit.
The Company’s diversified deposit base provides a sizeable source of relatively stable and low-cost funding, while reducing the Company’s reliance on the wholesale markets. Total deposits were $41.6 billion as of December 31, 2023, compared with $27.1 billion as of December 31, 2022. The Bank also has liquidity from excess bond collateral of $5.1 billion.
The Banks’s diversified deposit base provides a sizeable source of relatively stable and low-cost funding, while reducing the Bank’s reliance on the wholesale markets. Total core deposits were $37.5 billion as of December 31, 2024, compared with $37.4 billion as of December 31, 2023. The Bank also has liquidity from excess bond collateral of $3.1 billion.
Financial Performance • Earnings per diluted common share were $1.78 for the year ended December 31, 2023, compared to $2.60 for the year ended December 31, 2022.
EXECUTIVE OVERVIEW Financial Performance • Earnings per diluted common share were $2.55 for the year ended December 31, 2024, compared to $1.78 for the year ended December 31, 2023.
As a percentage of average outstanding loans and leases, the provision for credit losses recorded for 2023 was 0.60%, as compared to 0.35% for the prior period. Net charge-offs were $96.7 million for 2023, or 0.27% of average loans and leases, compared to net charge-offs of $30.9 million, or 0.13% of average loans and leases, for 2022.
As a percentage of average outstanding loans and leases, the provision for credit losses recorded for 2024 was 0.28%, as compared to 0.60% for the prior period. Net charge-offs were $129.2 million for 2024, or 0.34% of average loans and leases, compared to net charge-offs of $96.7 million, or 0.27% of average loans and leases, for 2023.
Due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds, the fair value of the MSR asset decreased by $6.1 million for the year ended December 31, 2023, as compared to an increase of $57.5 million for the year ended December 31, 2022.
Due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds, the fair value of the MSR asset increased by $5.2 million for the year ended December 31, 2024, as compared to a decrease of $6.1 million for the year ended December 31, 2023.
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 3.91% for 2023, an increase of 29 basis points compared to 2022.
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 3.57% for 2024, as compared to 3.91% for 2023, a decrease of 34 basis points.
RECENT ACCOUNTING PRONOUNCEMENTS Information regarding Recent Accounting Pronouncements is included in Note 1 of the Notes to Consolidated Financial Statements in Item 8 below . 45 Table of Contents RESULTS OF OPERATIONS As of December 31, 2023, Columbia's financial results for any periods ended prior to February 28, 2023, the Merger Date, reflect UHC results only on a standalone basis.
RECENT ACCOUNTING PRONOUNCEMENTS Information regarding Recent Accounting Pronouncements is included in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K . RESULTS OF OPERATIONS Columbia's financial results for any periods ended prior to February 28, 2023, the Merger Date, reflect UHC results only on a standalone basis.
As a percentage of average outstanding loans and leases, the provision for credit losses for the year ended December 31, 2023 was 0.60%, as compared to 0.35% for the prior year. Liquidity • Total cash and cash equivalents were $2.2 billion as of December 31, 2023, an increase of $867.9 million from December 31, 2022.
As a percentage of average outstanding loans and leases, the provision for credit losses for the year ended December 31, 2024 was 0.28%, as compared to 0.60% for the prior year. Liquidity • Total cash and cash equivalents were $1.9 billion as of December 31, 2024, a decrease of $284.3 million from December 31, 2023.
The Company undertook several strategic actions in 2022 and 2023 to restructure its mortgage business given lower mortgage origination volume in the higher rate environment and a focus on relationship banking that drives balanced growth in loans, deposits, and core fee income.
This sale was the result of strategic actions taken by the Company to restructure its mortgage business given the lower mortgage origination volume in the higher rate environment and focus on relationship banking that drives balanced growth in loans, deposits, and core fee income.
Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Supervision and Regulation section in Item 1 above.
Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Supervision and Regulation section in Item 1 of this Annual Report on Form 10-K.
The variance was due to a net fair value loss of $28.5 million related to the MSR asset for the year ended December 31, 2023, compared to a net fair value gain of $22.8 million for the same period in 2022, which is net of MSR hedge losses of $4.7 million for the current year compared to $14.5 million in the prior year.
The variance was due to a favorable change in the net fair value loss of the MSR asset as a result of a $15.9 million loss for the year ended December 31, 2024, compared to a net fair value loss of $28.5 million for the same period in 2023, which is inclusive of MSR hedge losses of $8.6 million for the current year compared to $4.7 million in the prior year.
Delinquency and non-accrual loan movements in the transportation and trucking portfolio over the year were anticipated and a slow recovery is expected for this portfolio.
Delinquencies and non-accrual loan movements in the transportation and trucking portion of the FinPac lease portfolio over the year were anticipated and a slow recovery is in process for this portfolio.
The following table sets forth the Company's and the Bank's capital ratios as of December 31, 2023 and 2022: Company Bank 2023 2022 2023 2022 CET1 risk-based capital ratio 9.64 % 11.02 % 10.52 % 11.92 % Tier 1 risk-based capital ratio 9.64 % 11.02 % 10.52 % 11.92 % Total risk-based capital ratio 11.86 % 13.71 % 11.57 % 12.92 % Leverage ratio 7.60 % 9.14 % 8.30 % 9.89 % Basel III also requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers.
The Federal Reserve uses the leverage and risk-based capital ratios to assess capital adequacy of banks and financial holding companies. 63 Table of Conte n t s The following table sets forth the Company's and the Bank's capital ratios as of December 31, 2024 and 2023: Company Bank 2024 2023 2024 2023 CET1 risk-based capital ratio 10.54 % 9.64 % 11.37 % 10.52 % Tier 1 risk-based capital ratio 10.54 % 9.64 % 11.37 % 10.52 % Total risk-based capital ratio 12.75 % 11.86 % 12.42 % 11.57 % Leverage ratio 8.31 % 7.60 % 8.97 % 8.30 % Basel III also requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases, and discretionary bonus payments to executive officers.
Return on Average Assets, Common Shareholders' Equity and Tangible Common Shareholders' Equity For the Years Ended December 31, 2023, 2022, and 2021: (dollars in thousands) 2023 2022 2021 Return on average assets 0.70 % 1.09 % 1.39 % Return on average common shareholders' equity 7.81 % 13.07 % 15.56 % Return on average tangible common shareholders' equity 11.46 % 13.11 % 15.63 % Calculation of average common tangible shareholders' equity: Average common shareholders' equity $ 4,466,725 $ 2,575,577 $ 2,700,711 Less: average goodwill and other intangible assets, net 1,423,075 6,847 12,057 Average tangible common shareholders' equity $ 3,043,650 $ 2,568,730 $ 2,688,654 Additionally, management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy.
Return on Average Assets, Common Shareholders' Equity and Tangible Common Shareholders' Equity For the years ended December 31, 2024, 2023, and 2022: (dollars in thousands) 2024 2023 2022 Return on average assets 1.03 % 0.70 % 1.09 % Return on average common shareholders' equity 10.55 % 7.81 % 13.07 % Return on average tangible common shareholders' equity 15.31 % 11.46 % 13.11 % Calculation of average common tangible shareholders' equity: Average common shareholders' equity $ 5,060,365 $ 4,466,725 $ 2,575,577 Less: average goodwill and other intangible assets, net 1,573,712 1,423,075 6,847 Average tangible common shareholders' equity $ 3,486,653 $ 3,043,650 $ 2,568,730 43 Table of Conte n t s Additionally, management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy.
LIQUIDITY AND SOURCES OF FUNDS The principal objective of our liquidity management program is to maintain the Bank's ability to meet the day-to-day cash flow requirements of our customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs.
The $10.0 million subordinated debenture matures in December 2025. 61 Table of Conte n t s LIQUIDITY AND SOURCES OF FUNDS The principal objective of our liquidity management program is to maintain the Bank's ability to meet the day-to-day cash flow requirements of our customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs.
PROVISION FOR CREDIT LOSSES The Company had a $213.2 million provision for credit losses for 2023, as compared to an $84.0 million provision for credit losses for 2022.
PROVISION FOR CREDIT LOSSES The Company had a $105.9 million provision for credit losses for 2024, as compared to a $213.2 million provision for credit losses for 2023.
For additional information related to the Company's ACL, see Note 6 in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.
For additional information related to the Company's ACL, see Note 1 – Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K.
Management believes the ACL, business combinations and goodwill estimates are important to the portrayal of the Company's financial condition and results of operations and requires difficult, subjective, or complex judgments and, therefore, management considers them to be critical accounting estimates.
Management believes the ACL and goodwill estimates are important to the portrayal of the Company's financial condition and results of operations and requires difficult, subjective, or complex judgments and, therefore, management considers them to be critical accounting estimates. Allowance for Credit Losses The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments.
Non-performing loans were $112.9 million, or 0.30% of total loans and leases, as of December 31, 2023, compared to $58.6 million, or 0.22% of total loans and leases, as of December 31, 2022.
Non-performing loans were $166.9 million, or 0.44% of total loans and leases, as of December 31, 2024, compared to $112.9 million, or 0.30% of total loans and leases, as of December 31, 2023. As of December 31, 2024, non-performing loans included $73.6 million in government guarantees.
The adequacy of the ACL is monitored on a regular basis and is based on management's evaluation of numerous factors, including: the CECL model outputs; quality of the current loan portfolio; the trend in the loan portfolio's risk ratings; current economic conditions; loan concentrations; loan growth rates; past-due and non-performing trends; evaluation of specific loss estimates for significant problem loans; historical charge-off and recovery experience; and other pertinent information.
The adequacy of the ACL is monitored regularly, considering factors such as: CECL model outputs; loan portfolio quality and risk ratings; economic conditions; loan concentrations and growth rates; past-due and non-performing trends; specific loss estimates for significant problem loans; historical charge-off and recovery experience.
Weighted average yields for available for sale investments have been calculated on an amortized cost basis. The mortgage-related securities in the table above include both pooled mortgage-backed issues and high-quality collateralized mortgage obligation structures, with an average duration of 5.4 years. These mortgage-related securities provide yield spread to U.S.
Yields are calculated on an amortized cost basis and are stated on a federal tax equivalent basis of 21%. 50 Table of Conte n t s The mortgage-related securities in the table above include both pooled mortgage-backed issues and high-quality collateralized mortgage obligation structures, with an average duration of 5.1 years. These mortgage-related securities provide yield spread to U.S.
These dividends were made pursuant to our existing dividend policy and in consideration of, among other things, earnings, regulatory capital levels, the overall payout ratio, and expected asset growth.
During 2024, Columbia declared a cash dividend of $0.36 per common share for all four quarters. These dividends were made pursuant to our existing dividend policy and in consideration of, among other things, earnings, regulatory capital levels, the overall payout ratio, and expected asset growth.
BORROWINGS As of December 31, 2023, the Bank had outstanding securities sold under agreements to repurchase of $252.1 million, a decrease of $56.7 million from December 31, 2022. As of December 31, 2023, the Bank had no outstanding federal funds purchased balances.
BORROWINGS As of December 31, 2024, the Bank had outstanding securities sold under agreements to repurchase of $236.6 million, a decrease of $15.5 million from December 31, 2023. As of December 31, 2024, the Bank had no outstanding federal funds purchased balances. The Bank had outstanding borrowings consisting of FHLB advances of $3.1 billion as of December 31, 2024.
It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types.
It is challenging to estimate how changes in any single economic factor or input might affect the overall allowance, as many factors and inputs are considered. These changes may not occur at the same rate or be consistent across all product types. Additionally, improvements in one factor may offset deterioration in others.
INCOME TAXES Our consolidated effective tax rate as a percentage of pre-tax income for 2023 was 26.0%, compared to 25.3% for 2022. The 2023 effective tax rate differed from the federal statutory rate of 21% principally because of state taxes, net tax-exempt income on investment securities, non-deductible FDIC assessments, and tax credits and benefits arising from low-income housing investments.
The 2024 effective tax rate differed from the federal statutory rate of 21% principally because of state taxes, net tax-exempt income on investment securities, non-deductible FDIC assessments, and tax credits and benefits arising from low-income housing investments.
Tangible common equity and the tangible common equity ratio are considered non-GAAP financial measures and should be viewed in conjunction with total shareholders' equity and the total shareholders' equity ratio. 46 Table of Contents The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of December 31, 2023, and 2022: (dollars in thousands) December 31, 2023 December 31, 2022 Total shareholders' equity $ 4,995,034 $ 2,479,826 Subtract: Goodwill 1,029,234 — Other intangible assets, net 603,679 4,745 Tangible common shareholders' equity $ 3,362,121 $ 2,475,081 Total assets $ 52,173,596 $ 31,848,639 Subtract: Goodwill 1,029,234 — Other intangible assets, net 603,679 4,745 Tangible assets $ 50,540,683 $ 31,843,894 Total shareholders' equity to total assets ratio 9.57 % 7.79 % Tangible common equity ratio 6.65 % 7.77 % Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or audited.
The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of December 31, 2024, and 2023: (dollars in thousands) December 31, 2024 December 31, 2023 Total shareholders' equity $ 5,118,224 $ 4,995,034 Less: Goodwill 1,029,234 1,029,234 Less: Other intangible assets, net 484,248 603,679 Tangible common shareholders' equity $ 3,604,742 $ 3,362,121 Total assets $ 51,576,397 $ 52,173,596 Less: Goodwill 1,029,234 1,029,234 Less: Other intangible assets, net 484,248 603,679 Tangible assets $ 50,062,915 $ 50,540,683 Total shareholders' equity to total assets ratio 9.92 % 9.57 % Tangible common equity to tangible assets ratio 7.20 % 6.65 % Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or audited.
The fluctuation in shareholders' equity during the year ended December 31, 2023 was principally due to the increase in common stock of $2.3 billion as a result of the Merger and net income of $348.7 million during the period, partially offset by cash dividends paid of $272.5 million for the year ended December 31, 2023. 65 Table of Contents The Federal Reserve Board has guidelines in place for risk-based capital requirements applicable to U.S. banks and bank/financial holding companies.
The fluctuation in shareholders' equity during the year ended December 31, 2024 was principally due to net income of $533.7 million, partially offset by cash dividends paid of $303.4 million during the period and other comprehensive loss of $121.8 million. The Federal Reserve Board has guidelines in place for risk-based capital requirements applicable to U.S. banks and bank/financial holding companies.
Commercial Real Estate Loans The commercial real estate portfolio includes loans to developers and institutional sponsors supporting income-producing or for-sale commercial real estate properties. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement.
We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement.
Refer to Note 12 - Income Taxes for more information about the Company's taxes. FINANCIAL CONDITION CASH AND CASH EQUIVALENTS Cash and cash equivalents were $2.2 billion as of December 31, 2023, compared to $1.3 billion at December 31, 2022.
Refer to Note 25 – Income Taxes in Item 8 of this Annual Report on Form 10-K for more information about the Company's taxes. FINANCIAL CONDITION CASH AND CASH EQUIVALENTS Cash and cash equivalents were $1.9 billion as of December 31, 2024, compared to $2.2 billion at December 31, 2023.
As of December 31, 2023, we had approximately $6.0 billion in time deposits, including $2.6 billion in brokered time deposits, with a weighted average rate of 4.66% maturing in 2024. 48 Table of Contents The following table presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the years ended December 31, 2023, 2022, and 2021: 2023 2022 2021 (dollars in thousands) Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates INTEREST-EARNING ASSETS: Loans held for sale $ 87,675 $ 3,871 4.42 % $ 208,141 $ 8,812 4.23 % $ 500,070 $ 15,149 3.03 % Loans and leases (1) 35,412,594 2,109,744 5.95 % 24,225,518 1,041,446 4.29 % 21,925,108 875,366 3.99 % Taxable securities 7,479,573 289,944 3.88 % 3,343,721 72,702 2.17 % 3,321,142 61,717 1.86 % Non-taxable securities (2) 740,376 28,236 3.81 % 216,943 6,669 3.07 % 248,256 7,458 3.00 % Temporary investments and interest-bearing cash 2,147,348 111,659 5.20 % 1,561,808 19,706 1.26 % 2,936,273 3,864 0.13 % Total interest earning assets (1)(2) 45,867,566 2,543,454 5.54 % 29,556,131 1,149,335 3.88 % 28,930,849 963,554 3.33 % Goodwill and other intangible assets 1,423,075 6,847 12,057 Other assets 2,205,678 1,254,418 1,324,466 Total assets $ 49,496,319 $ 30,817,396 $ 30,267,372 INTEREST-BEARING LIABILITIES: Interest-bearing demand deposits $ 6,280,333 $ 97,162 1.55 % $ 3,886,390 $ 8,185 0.21 % $ 3,462,035 $ 1,865 0.05 % Money market deposits 9,962,837 185,035 1.86 % 7,552,666 26,415 0.35 % 7,624,707 5,964 0.08 % Savings deposits 2,994,333 3,384 0.11 % 2,411,448 880 0.04 % 2,200,608 729 0.03 % Time deposits 4,743,615 176,073 3.71 % 1,743,988 12,715 0.73 % 2,217,464 18,593 0.84 % Total interest-bearing deposits 23,981,118 461,654 1.93 % 15,594,492 48,195 0.31 % 15,504,814 27,151 0.18 % Repurchase agreements and federal funds purchased 269,853 3,923 1.45 % 465,600 997 0.21 % 454,994 280 0.06 % Borrowings 4,522,656 242,914 5.37 % 226,665 8,920 3.94 % 195,985 2,838 1.45 % Junior and other subordinated debentures 421,195 37,665 8.94 % 399,568 19,889 4.98 % 369,259 12,127 3.28 % Total interest-bearing liabilities 29,194,822 746,156 2.56 % 16,686,325 78,001 0.47 % 16,525,052 42,396 0.26 % Non-interest-bearing deposits 14,927,443 11,053,921 10,669,531 Other liabilities 907,329 501,573 372,078 Total liabilities 45,029,594 28,241,819 27,566,661 Common equity 4,466,725 2,575,577 2,700,711 Total liabilities and shareholders' equity $ 49,496,319 $ 30,817,396 $ 30,267,372 NET INTEREST INCOME (2) $ 1,797,298 $ 1,071,334 $ 921,158 NET INTEREST SPREAD (2) 2.98 % 3.41 % 3.07 % NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN 3.91 % 3.62 % 3.18 % (1) Non-accrual loans and leases are included in the average balance.
Further, the impact of balance sheet composition changes and the higher interest rate environment shifted the interest rate sensitivity position of the balance sheet to a liability sensitive position as of December 31, 2024 from an asset sensitive position at the onset of the rising rate environment. 45 Table of Conte n t s The following table presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the years ended December 31, 2024, 2023, and 2022: 2024 2023 2022 (dollars in thousands) Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates Average Balance Interest Income or Expense Average Yields or Rates INTEREST-EARNING ASSETS: Loans held for sale $ 69,348 $ 4,505 6.50 % $ 87,675 $ 3,871 4.42 % $ 208,141 $ 8,812 4.23 % Loans and leases (1) 37,585,426 2,315,859 6.15 % 35,412,594 2,109,744 5.95 % 24,225,518 1,041,446 4.29 % Taxable securities 7,928,449 317,134 4.00 % 7,479,573 289,944 3.88 % 3,343,721 72,702 2.17 % Non-taxable securities (2) 833,915 31,499 3.78 % 740,376 28,236 3.81 % 216,943 6,669 3.07 % Temporary investments and interest-bearing cash 1,696,070 90,227 5.32 % 2,147,348 111,659 5.20 % 1,561,808 19,706 1.26 % Total interest-earning assets (1)(2) 48,113,208 2,759,224 5.73 % 45,867,566 2,543,454 5.54 % 29,556,131 1,149,335 3.88 % Goodwill and other intangible assets 1,573,712 1,423,075 6,847 Other assets 2,228,134 2,205,678 1,254,418 Total assets $ 51,915,054 $ 49,496,319 $ 30,817,396 INTEREST-BEARING LIABILITIES: Interest-bearing demand deposits $ 8,265,535 $ 214,869 2.60 % $ 6,280,333 $ 97,162 1.55 % $ 3,886,390 $ 8,185 0.21 % Money market deposits 10,998,452 299,741 2.73 % 9,962,837 185,035 1.86 % 7,552,666 26,415 0.35 % Savings deposits 2,528,828 3,409 0.13 % 2,994,333 3,384 0.11 % 2,411,448 880 0.04 % Time deposits 6,219,996 284,787 4.58 % 4,743,615 176,073 3.71 % 1,743,988 12,715 0.73 % Total interest-bearing deposits 28,012,811 802,806 2.87 % 23,981,118 461,654 1.93 % 15,594,492 48,195 0.31 % Repurchase agreements and federal funds purchased 212,235 4,873 2.30 % 269,853 3,923 1.45 % 465,600 997 0.21 % Borrowings 3,691,530 190,241 5.15 % 4,522,656 242,914 5.37 % 226,665 8,920 3.94 % Junior and other subordinated debentures 419,459 38,918 9.28 % 421,195 37,665 8.94 % 399,568 19,889 4.98 % Total interest-bearing liabilities 32,336,035 1,036,838 3.21 % 29,194,822 746,156 2.56 % 16,686,325 78,001 0.47 % Non-interest-bearing deposits 13,608,946 14,927,443 11,053,921 Other liabilities 909,708 907,329 501,573 Total liabilities 46,854,689 45,029,594 28,241,819 Common equity 5,060,365 4,466,725 2,575,577 Total liabilities and shareholders' equity $ 51,915,054 $ 49,496,319 $ 30,817,396 NET INTEREST INCOME (2) $ 1,722,386 $ 1,797,298 $ 1,071,334 NET INTEREST SPREAD (2) 2.52 % 2.98 % 3.41 % NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN 3.57 % 3.91 % 3.62 % (1) Non-accrual loans and leases are included in the average balance.
Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. 44 Table of Conte n t s NET INTEREST INCOME Net interest income for 2024 was $1.7 billion, a decrease of $74.8 million, or 4%, compared to the same period in 2023.
CONCENTRATIONS OF CREDIT RISK Information regarding Concentrations of Credit Risk is included in Notes 3, 5, and 18 of the Notes to Consolidated Financial Statements in Item 8 below . CAPITAL RESOURCES Shareholders' equity as of December 31, 2023 and 2022 was $5.0 billion and $2.5 billion, respectively.
CONCENTRATIONS OF CREDIT RISK Information regarding Concentrations of Credit Risk is included in Notes 3, 5, and 16 of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K . CAPITAL RESOURCES Shareholders' equity as of December 31, 2024 was $5.1 billion, an increase of $123.2 million from December 31, 2023.
These liquidity sources include capacity to borrow from uncommitted lines of credit, advances from the FHLB, the Federal Reserve Bank’s Discount Window and the BTFP. The ability to take new advances under the BTFP ends in March 2024. Availability of the uncommitted lines of credit is subject to federal funds balances available for loan and continued borrower eligibility.
These liquidity sources include capacity to borrow from uncommitted lines of credit, advances from the FHLB, and the Federal Reserve Bank’s Discount Window. Availability of the uncommitted lines of credit is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage.
INVESTMENT SECURITIES The composition of our investment securities portfolio reflects management's investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of interest income.
Excess cash was used to pay down borrowings, as well as to fund loan portfolio growth of $239.0 million. INVESTMENT SECURITIES The composition of our investment securities portfolio reflects management's investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of interest income.
As of December 31, 2023, our loan commitments were $11.3 billion. A portion of the commitments will eventually result in funded loans and increase our profitability through net interest income when drawn and unused commitment fees prior to being drawn. Refer to Note 18 - Commitments and Contingencies for further information.
A portion of the commitments will eventually result in funded loans and increase our profitability through net interest income when drawn and unused commitment fees prior to being drawn. Refer to Note 16 – Commitments and Contingencies and Related-Party Transactions in Item 8 of this Annual Report on Form 10-K for further information.
The FDIC generally provides a standard amount of insurance of $250,000 per depositor for each account ownership category defined by the FDIC. Depositors may qualify for coverage of accounts over $250,000 if they have funds in different ownership categories and all FDIC requirements are met.
Depositors may qualify for coverage of accounts over $250,000 if they have funds in different ownership categories and all FDIC requirements are met. All deposits that an account owner has in the same ownership category at the same bank are added together and insured up to the standard insurance amount.
RESIDENTIAL MORTGAGE SERVICING RIGHTS The following table presents the key elements of our residential mortgage servicing rights asset as of December 31, 2023, 2022, and 2021: (dollars in thousands) 2023 2022 2021 Balance, beginning of period $ 185,017 $ 123,615 $ 92,907 Additions for new MSR capitalized 5,347 24,137 38,522 Sale of MSR assets (57,305) — — Changes in fair value: Changes due to collection/realization of expected cash flows over time (17,694) (20,272) (18,903) Changes due to valuation inputs or assumptions (1) (6,122) 57,537 11,089 Balance, end of period $ 109,243 $ 185,017 $ 123,615 (1) The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates. 61 Table of Contents Information related to our serviced loan portfolio as of December 31, 2023 and 2022 were as follows: (dollars in thousands) December 31, 2023 December 31, 2022 Balance of loans serviced for others $ 8,175,664 $ 13,020,189 MSR as a percentage of serviced loans 1.34 % 1.42 % Residential MSR are adjusted to fair value quarterly with the change recorded in residential mortgage banking revenue on the Consolidated Statements of Operations.
The following table sets forth the allocation of the ACLLL and percent of loans and leases in each category to total loans and leases, net of deferred fees, as of December 31 for each of the last two years: December 31, 2024 December 31, 2023 (dollars in thousands) Amount % Amount % Commercial real estate $ 154,413 52 % $ 125,888 52 % Commercial 218,668 26 % 244,821 26 % Residential 44,700 21 % 62,004 21 % Consumer & other 6,848 1 % 8,158 1 % Allowance for credit losses on loans and leases $ 424,629 100 % $ 440,871 100 % RESIDENTIAL MORTGAGE SERVICING RIGHTS The following table presents the key elements of our residential mortgage servicing rights asset as of December 31, 2024, 2023, and 2022: (dollars in thousands) 2024 2023 2022 Balance, beginning of period $ 109,243 $ 185,017 $ 123,615 Additions for new MSR capitalized 6,452 5,347 24,137 Sale of MSR assets — (57,305) — Changes in fair value: Changes due to collection/realization of expected cash flows over time (12,566) (17,694) (20,272) Changes due to valuation inputs or assumptions (1) 5,229 (6,122) 57,537 Balance, end of period $ 108,358 $ 109,243 $ 185,017 (1) The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates. 59 Table of Conte n t s Information related to our serviced loan portfolio as of December 31, 2024 and 2023 were as follows: (dollars in thousands) December 31, 2024 December 31, 2023 Balance of loans serviced for others $ 7,939,445 $ 8,175,664 MSR as a percentage of serviced loans 1.36 % 1.34 % Residential MSR are adjusted to fair value quarterly with the change recorded in residential mortgage banking revenue on the Consolidated Statements of Income.
Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances. 2023 compared to 2022 2022 compared to 2021 Increase (decrease) in interest income and expense due to changes in Increase (decrease) in interest income and expense due to changes in (in thousands) Volume Rate Total Volume Rate Total Interest-earning assets: Loans held for sale $ (5,304) $ 363 $ (4,941) $ (10,935) $ 4,598 $ (6,337) Loans and leases 581,254 487,044 1,068,298 97,290 68,790 166,080 Taxable securities 133,038 84,204 217,242 422 10,563 10,985 Non-taxable securities (1) 19,611 1,956 21,567 (959) 170 (789) Temporary investments and interest-bearing deposits 9,861 82,092 91,953 (2,612) 18,454 15,842 Total interest-earning assets (1) 738,460 655,659 1,394,119 83,206 102,575 185,781 Interest-bearing liabilities: Interest-bearing demand deposits 7,873 81,104 88,977 255 6,065 6,320 Money market deposits 10,935 147,685 158,620 (57) 20,508 20,451 Savings deposits 259 2,245 2,504 73 78 151 Time deposits 48,352 115,006 163,358 (3,648) (2,230) (5,878) Repurchase agreements and federal funds purchased (810) 3,736 2,926 348 369 717 Borrowings 229,574 4,420 233,994 508 5,574 6,082 Junior and other subordinated debentures 1,131 16,645 17,776 1,066 6,696 7,762 Total interest-bearing liabilities 297,314 370,841 668,155 (1,455) 37,060 35,605 Net increase in net interest income (1) $ 441,146 $ 284,818 $ 725,964 $ 84,661 $ 65,515 $ 150,176 (1) Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate.
Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances. 2024 compared to 2023 2023 compared to 2022 Increase (decrease) in interest income and expense due to changes in Increase (decrease) in interest income and expense due to changes in (in thousands) Volume Rate Total Volume Rate Total Interest-earning assets: Loans held for sale $ (926) $ 1,560 $ 634 $ (5,304) $ 363 $ (4,941) Loans and leases 132,620 73,495 206,115 581,254 487,044 1,068,298 Taxable securities 17,763 9,427 27,190 133,038 84,204 217,242 Non-taxable securities (1) 3,535 (272) 3,263 19,611 1,956 21,567 Temporary investments and interest-bearing cash (23,954) 2,522 (21,432) 9,861 82,092 91,953 Total interest-earning assets (1) 129,038 86,732 215,770 738,460 655,659 1,394,119 Interest-bearing liabilities: Interest-bearing demand deposits 37,341 80,366 117,707 7,873 81,104 88,977 Money market 20,869 93,837 114,706 10,935 147,685 158,620 Savings (571) 596 25 259 2,245 2,504 Time deposits 62,111 46,603 108,714 48,352 115,006 163,358 Repurchase agreements (719) 1,669 950 (810) 3,736 2,926 Borrowings (43,159) (9,514) (52,673) 229,574 4,420 233,994 Junior subordinated debentures (155) 1,408 1,253 1,131 16,645 17,776 Total interest-bearing liabilities 75,717 214,965 290,682 297,314 370,841 668,155 Net increase (decrease) in net interest income (1) $ 53,321 $ (128,233) $ (74,912) $ 441,146 $ 284,818 $ 725,964 (1) Tax-exempt income was adjusted to a tax equivalent basis at a 21% tax rate.
This consisted primarily of unrealized losses on mortgage-backed securities and collateralized mortgage obligations of $387.6 million. The unrealized losses were primarily attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality.
The unrealized losses were primarily attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality. In the opinion of management, no ACL was considered necessary on these debt securities as of December 31, 2024.
The change in fair value was due to a decrease in the implied forward curve and the spot curve shifting higher, partially offset by a decrease in credit spread. As of December 31, 2023, substantially all of the junior subordinated debentures had interest rates that are adjustable on a quarterly basis based on a spread over three-month term SOFR.
As of December 31, 2024, substantially all of the junior subordinated debentures had interest rates that are adjustable on a quarterly basis based on a spread over three-month term SOFR.
The increase in provision expense for the year ended December 31, 2023 as compared to the prior year reflects the $88.4 million initial provision for historical Columbia non-PCD loans related to the Merger, changes in the economic forecasts used in credit models, and portfolio migration trends.
The decrease in provision expense for the year ended December 31, 2024 as compared to the prior year was due to the prior year including an $88.4 million initial provision for historical Columbia non-PCD loans related to the Merger.
The deposit portfolio mix also reflects a migration from non-interest bearing to interest-bearing accounts and alternative investments, as customers evaluated the interest rate earned on excess cash balances in the higher interest rate environment. • Total consolidated assets were $52.2 billion as of December 31, 2023, compared to $31.8 billion as of December 31, 2022.
The interest-bearing deposit mix increased mainly due to a migration from non-interest-bearing to interest-bearing accounts as customers seek higher rates in the current interest rate environment. • Total consolidated assets were $51.6 billion as of December 31, 2024, compared to $52.2 billion as of December 31, 2023.
The increase is primarily driven by the initial provision for historical Columbia non-PCD loans of $88.4 million, changes in the economic forecast used in credit models, organic growth in the loan and lease portfolio, and portfolio migration trends.
The change was primarily driven by the $88.4 million initial provision for historical Columbia non-PCD loans that was recorded in the first quarter of 2023, in addition to credit migration trends, charge-off activity, and changes in the economic forecasts used in credit models.
During that period, our net interest margin expanded as our asset sensitive balance sheet became increasingly profitable due to active rate increases by the Federal Reserve.
Between March 2022 and July 2023, the Federal Reserve raised the target range for the federal funds rate by 5.25%. During that period, our net interest margin expanded as our balance sheet became increasingly profitable due to active rate increases by the Federal Reserve and the lagged impact to deposit pricing compared to earning asset repricing.
Goodwill is reviewed for potential impairment annually, on October 31, or more frequently if events or circumstances indicate a potential impairment. For the year ended December 31, 2023 there were no goodwill impairment losses recognized. As of December 31, 2023, we had other intangible assets of $603.7 million, compared to $4.7 million as of December 31, 2022.
For the years ended December 31, 2024 and 2023, there were no goodwill impairment losses recognized. As of December 31, 2024, we had other intangible assets of $484.2 million, compared to $603.7 million as of December 31, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations, on Umpqua Holding Corporation's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 24, 2023. EXECUTIVE OVERVIEW Business Combination • Columbia completed its previously announced merger with UHC on February 28, 2023.
For a discussion of the year ended December 31, 2022, including a comparison to the year ended December 31, 2023, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, on Registrant's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 27, 2024.
Other income (loss) in 2023 compared to 2022 increased primarily due to a favorable change in the fair value of certain loans held for investment resulting in a fair value gain of $2.6 million for the year ended December 31, 2023 as compared to a fair value loss of $58.5 million for the year ended December 31, 2022; fair value changes for these loans have an inverse relationship with relevant interest rate changes during the year.
Other income in 2024 compared to 2023 decreased primarily due to an unfavorable change of $13.1 million in the fair value of certain loans held for investment, as the impact of interest rate fluctuations resulted in a loss of $10.5 million in the current year as compared to a gain of $2.6 million in the prior year.
The models for calculating the ACL are sensitive to changes to economic variables, which could result in volatility as these assumptions change over time. We believe that the ACL as of December 31, 2023 is sufficient to absorb losses inherent in the loan and lease portfolio and in credit commitments outstanding as of that date based on the information available.
We believe that the ACL as of December 31, 2024 is sufficient to absorb losses inherent in the loan and lease portfolio and in credit commitments outstanding as of that date based on the information available. If the economic conditions decline, the Bank may need additional provisions for credit losses in future periods.
The company accrued $32.9 million in the fourth quarter of 2023 related to the special assessment, which is included in non-interest expense on the Consolidated Statements of Operations. 43 Table of Contents CRITICAL ACCOUNTING ESTIMATES In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period.
CRITICAL ACCOUNTING ESTIMATES In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.
We focus on borrowers doing business within our geographic markets. Commercial loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. Lease and equipment financing products are designed to address the diverse financing needs of small to large companies, primarily for the acquisition of equipment.
The Bank focuses on borrowers doing business within our geographic markets. Commercial loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. Underwriting standards are designed to promote relationship banking rather than transactional banking.
As of December 31, 2023, there was an increase in non-performing loans as compared to December 31, 2022, which is representative of a more normalized credit environment. 59 Table of Contents ALLOWANCE FOR CREDIT LOSSES The ACL totaled $464.1 million as of December 31, 2023, an increase of $148.7 million from the $315.4 million as of December 31, 2022.
As of December 31, 2024, there was an increase in non-performing loans as compared to December 31, 2023, which is representative of a more normalized credit environment. 57 Table of Conte n t s ALLOWANCE FOR CREDIT LOSSES The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments.
ASSET QUALITY AND NON-PERFORMING ASSETS The following table summarizes our non-performing assets and restructured loans, as of December 31, 2023 and 2022: (dollars in thousands) December 31, 2023 December 31, 2022 Loans and leases on non-accrual status Commercial real estate, net $ 28,689 $ 5,011 Commercial, net 45,682 25,691 Total loans and leases on non-accrual status 74,371 30,702 Loans and leases past due 90 days or more and accruing Commercial real estate, net 870 1 Commercial, net 8,232 7,909 Residential, net (1) 29,102 19,894 Consumer & other, net 326 134 Total loans and leases past due 90 days or more and accruing (1) 38,530 27,938 Total non-performing loans and leases 112,901 58,640 Other real estate owned 1,036 203 Total non-performing assets $ 113,937 $ 58,843 Allowance for credit losses on loans and leases $ 440,871 $ 301,135 Reserve for unfunded commitments 23,208 14,221 Allowance for credit losses $ 464,079 $ 315,356 Asset quality ratios: Non-performing assets to total assets (1) 0.22 % 0.18 % Non-performing loans and leases to total loans and leases (1) 0.30 % 0.22 % Non-accrual loans and leases to total loans and leases 0.20 % 0.12 % ACL on loan and lease losses to total loans and leases 1.18 % 1.15 % ACL to total loans and leases 1.24 % 1.21 % ACL to non-accrual loans and leases 624 % 1,027 % ACL to total non-performing loans and leases 411 % 538 % (1) Excludes government guaranteed GNMA mortgage loans that Columbia has the right but not the obligation to repurchase that are past due 90 days or more totaling $1.0 million as of December 31, 2023.
The following table summarizes our non-performing assets as of December 31, 2024 and 2023: (dollars in thousands) December 31, 2024 December 31, 2023 Non-performing assets: (1) Loans and leases on non-accrual status Commercial real estate, net $ 39,332 $ 28,689 Commercial, net 57,146 45,682 Total loans and leases on non-accrual status 96,478 74,371 Loans and leases past due 90 days or more and accruing (2) Commercial real estate, net — 870 Commercial, net 4,684 8,232 Residential, net (2) 65,552 29,102 Consumer & other, net 179 326 Total loans and leases past due 90 days or more and accruing (2) 70,415 38,530 Total non-performing loans and leases (1), (2) 166,893 112,901 Other real estate owned 2,666 1,036 Total non-performing assets (1), (2) $ 169,559 $ 113,937 ACLLL $ 424,629 $ 440,871 Reserve for unfunded commitments 16,168 23,208 ACL $ 440,797 $ 464,079 Asset quality ratios: Non-performing assets to total assets (1), (2) 0.33 % 0.22 % Non-performing loans and leases to total loans and leases (1), (2) 0.44 % 0.30 % Non-accrual loans and leases to total loans and leases (2) 0.26 % 0.20 % ACLLL to total loans and leases 1.13 % 1.18 % ACL to total loans and leases 1.17 % 1.24 % ACL to non-accrual loans and leases 457 % 624 % ACL to total non-performing loans and leases 264 % 411 % (1) Non-accrual and 90+ days past due loans include government guarantees of $41.5 million and $32.1 million, respectively, as of December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeEconomic Value of Equity Another interest rate sensitivity measure we utilize is the quantification of economic value changes for all financial assets and liabilities, given an increase or decrease in market interest rates. This approach provides a longer-term view of interest rate risk, capturing all future expected cash flows.
Biggest changeInterest Rate Simulation Impact on Net Interest Income As of December 31, 2024 Year 1 Year 2 Up 300 basis points (0.5) % (0.1) % Up 200 basis points (0.3) % — % Up 100 basis points (0.1) % — % Down 100 basis points 0.1 % (0.2) % Down 200 basis points 0.4 % (0.4) % Down 300 basis points 1.1 % (0.7) % Economic Value of Equity Another interest rate sensitivity measure we utilize is the quantification of economic value changes for all financial assets and liabilities, given an increase or decrease in market interest rates.
Net Interest Income Simulation Interest rate sensitivity is a function of the repricing characteristics of our interest earning assets and interest-bearing liabilities. These repricing characteristics are the time frames within which the interest-bearing assets and liabilities are subject to change in interest rates either at replacement, repricing, or maturity during the life of the instruments.
Net Interest Income Simulation Interest rate sensitivity is a function of the repricing characteristics of our interest-earning assets and interest-bearing liabilities. These repricing characteristics are the time frames within which the interest-earning assets and interest-bearing liabilities are subject to change in interest rates either at replacement, repricing, or maturity during the life of the instruments.
This occurs as the increase in value of interest earning assets exceeds the decline in economic value of interest-bearing liabilities, including the core deposit intangible. Our overall sensitivity to changes in market interest rates shifted from the prior year, primarily due to the relative level of market interest rates and changes in asset and funding mix during the year.
This occurs as the increase in economic value of interest-earning assets exceeds the decline in economic value of interest-bearing liabilities, including the core deposit intangible. Our overall sensitivity to changes in market interest rates shifted from the prior year, primarily due to the relative level of market interest rates and changes in asset and funding mix during the year.
For example, the "up 200 basis points" scenario is based on a theoretical increase in market rates of 16.7 basis points per month for twelve months applied to the balance sheet of December 31 for each respective year.
For example, the "up 200 basis points" scenario is based on a theoretical increase in market rates of 16.7 basis points per month for twelve months applied to the balance sheet as of December 31 for each respective year.
For the scenarios shown, the interest rate simulation assumes a parallel and sustained shift in market interest rates ratably over a twelve-month period and no change in the composition or size of the balance sheet.
For the scenarios shown, the interest rate simulation assumes a parallel and sustained shift in market interest rates ratably over a twelve-month period with no change in the composition or size of the balance sheet.
Interest rate sensitivity in the first year of the net interest income simulation for increasing interest rate scenarios is negatively impacted by the cost of non-maturity deposits repricing immediately while interest earnings assets (primarily the loan and leases held for investment portfolio) reprice at a slower rate based upon the instrument repricing characteristics.
Interest rate sensitivity in the first year of the net interest income simulation for increasing interest rate scenarios is negatively impacted by non-maturity deposits repricing immediately while interest-earning assets (primarily the loan and leases held for investment portfolio) reprice at a slower rate based upon the instrument repricing characteristics.
Our projections indicate that in rising and falling interest rate environments the Company's net interest income would decrease or increase by a very modest amount. In 2021 and 2022, we were "asset-sensitive" meaning we expected our net interest income to increase as market rates increased and to decrease as market rates decreased.
Our current and 2023 projections indicate that in rising and falling interest rate environments the Company's net interest income would decrease or increase by a very modest amount. In 2022, we were "asset-sensitive" meaning we expected our net interest income to increase as market rates increased and to decrease as market rates decreased.
Interest Rate Simulation Impact on Net Interest Income As of December 31, 2023 2022 2021 Up 300 basis points (2.1) % 1.7 % 9.7 % Up 200 basis points (1.4) % 1.1 % 6.3 % Up 100 basis points (0.7) % 0.6 % 3.0 % Down 100 basis points 0.6 % (2.4) % (1.2) % Down 200 basis points 1.1 % (5.1) % (2.4) % Down 300 basis points 1.6 % (7.8) % (3.1) % Our interest rate risk sensitivity at December 31, 2023 is minimal.
Interest Rate Simulation Impact on Net Interest Income As of December 31, 2024 2023 2022 Up 300 basis points (0.5) % (2.1) % 1.7 % Up 200 basis points (0.3) % (1.4) % 1.1 % Up 100 basis points (0.1) % (0.7) % 0.6 % Down 100 basis points 0.1 % 0.6 % (2.4) % Down 200 basis points 0.4 % 1.1 % (5.1) % Down 300 basis points 1.1 % 1.6 % (7.8) % Our interest rate risk sensitivity at December 31, 2024 is minimal.
This suggests a sudden or sustained increase in market interest rates would result in a decrease in our estimated economic value of equity, as the decrease in value of our interest earning assets exceeds the economic value change of interest-bearing liabilities. In declining interest rate scenarios, our economic value of equity increases.
This suggests a sudden or sustained increase in market interest rates would result in a decrease in our estimated EVE, as the decrease in the economic value of our interest-earning assets exceeds the increase in economic value of interest-bearing liabilities. In declining interest rate scenarios, our EVE increases.
If hypothetical changes to interest rates cause changes to our simulated net interest income simulation or economic value of equity modeling outside of our pre-established internal limits, we may adjust the asset and liability size or mix in an effort to bring our interest rate risk exposure within our established limits.
If hypothetical changes in interest rates cause changes to our simulated net interest income simulation or EVE modeling outside of our pre-established internal limits, we may adjust the asset and liability size or mix in an effort to bring our interest rate risk exposure within our established limits.
We measure our interest rate risk position monthly. The primary tools we use to measure our interest rate risk are net interest income simulation analyses and economic value of equity (fair value of financial instruments) modeling. The results of these analyses are reviewed by the ALCO monthly.
We measure our interest rate risk position monthly. The primary tools we use to measure our interest rate risk are net interest income simulation analyses and EVE (fair value of financial instruments) modeling. The results of these analyses are reviewed by the ALCO on a monthly basis.
Loan repricing characteristics are a significant component of interest rate sensitivity. Variable and adjustable-rate loans may or may not contain a rate floor, which impacts the sensitivity of the instrument based on repricing timing and the magnitude of the change in interest rate.
Variable and adjustable-rate loans may or may not contain a rate floor, which impacts the sensitivity of the instrument based on repricing timing and the magnitude of the change in interest rate.
We employ estimates based upon assumptions for each scenario, including changes in the size or mix of the balance sheet, new volume rates for new balances, the rate of prepayments, and the correlation of pricing to changes in the interest rate environment.
We employ estimates based upon assumptions for each scenario, new volume rates for new balances, the rate of prepayments, and the correlation of pricing to changes in the interest rate environment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk management is an integral part of our risk culture. Our Enterprise Risk Management group is a risk management function that partners with the line of business to identify, measure, and monitor market risks throughout the company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk management is an integral part of our risk culture. Our Financial Risk Management group (FRM) is the risk management function that partners with business units to identify, measure, and manage market risks throughout the Company.
As of December 31, 2023, our estimated economic value of equity (fair value of financial assets and liabilities) was above our book value of equity primarily due to an increase in the economic value core deposit intangible. 71 Table of Contents
As of December 31, 2024, our estimated EVE (fair value of financial assets and liabilities) was above our book value of equity primarily due to an increase in the economic value of the core deposit intangible. 68 Table of Conte n t s
The adjustable loans may not reprice until well into the future, depending on the timing and size of interest rate changes. 69 Table of Contents Changes that could vary significantly from our assumptions include loan and deposit growth or contraction, changes in the mix of our earning assets or funding sources, and future asset/liability management decisions, all of which may have significant effects on our net interest income.
Changes that could vary significantly from our assumptions include loan and deposit growth or contraction, changes in the mix of our earning assets or funding sources, and future asset/liability management decisions, all of which may have significant effects on our net interest income.
This analysis assumes the same rate shift over the first year of the scenario as described above and holding steady thereafter. The estimated impact on our net interest income over the first and second-year time horizons as it relates to our balance sheet as of December 31, 2023 is indicated in the table below.
The estimated impact on our net interest income over the first and second-year time horizons as it relates to our balance sheet as of December 31, 2024, is indicated in the table below.
The table below illustrates the effects of various instantaneous market interest rate changes on the fair values of financial assets and liabilities compared to the corresponding carrying values and fair values: Interest Rate Simulation Impact on Fair Value of Financial Assets and Liabilities As of December 31, 2023 2022 Up 300 basis points (21.9) % (14.0) % Up 200 basis points (14.6) % (9.4) % Up 100 basis points (7.1) % (4.4) % Down 100 basis points 6.8 % 0.9 % Down 200 basis points 12.0 % 0.1 % Down 300 basis points 15.1 % (2.5) % As of December 31, 2023, our economic value of equity analysis indicates a liability sensitive profile.
The projections are by their nature forward-looking and therefore inherently uncertain and include various assumptions regarding cash flows and discount rates. 67 Table of Conte n t s The table below illustrates the effects of various instantaneous market interest rate changes on the fair values of financial assets and liabilities compared to the corresponding carrying values and fair values: Interest Rate Simulation Impact on Fair Value of Financial Assets and Liabilities As of December 31, 2024 2023 Up 300 basis points (15.3) % (21.9) % Up 200 basis points (9.6) % (14.6) % Up 100 basis points (4.7) % (7.1) % Down 100 basis points 4.5 % 6.8 % Down 200 basis points 8.2 % 12.0 % Down 300 basis points 10.3 % 15.1 % As of December 31, 2024, our EVE analysis indicates a liability sensitive profile.
The change in sensitivity as of December 31, 2023, from the prior year was due to the impact of increasing interest rates resulting from Federal Reserve monetary policy and changes in funding and asset mixes. The mix shift of deposits from non-interest-bearing deposits to higher beta funding sources was a significant contributor of the change.
The change in sensitivity as of December 31, 2024, from the prior year was due to the impact of decreasing interest rates resulting from Federal Reserve monetary policy and changes in funding and asset mixes.
As a result, interest sensitivity in increasing interest rates scenarios improves in subsequent years as these assets reprice. Conversely, in a declining interest scenario, net interest income is negatively impacted by assets repricing lower.
As a result, interest rate sensitivity in increasing interest rates scenarios improves in subsequent years as these assets reprice. Conversely, in a declining interest scenario, after year 1, net interest income is negatively impacted by assets repricing lower. Deposit products reprice lower, but certain low interest rate products remain at or hit their floors during the forecast horizon.
Also, some of the assumptions made in the simulation model may not materialize and unanticipated events and circumstances may occur. In addition, the simulation model does not take into account actions management could undertake to mitigate the impact a change in interest rates may have on our credit risk profile, loan prepayment estimates and spread relationships, which can change regularly.
Also, some of the assumptions made in the simulation model may not materialize and unanticipated events and circumstances may occur. In addition, the simulation model does not take into account actions management could undertake to mitigate negative impacts.
It ensures transparency of significant market risks, monitoring compliance with Board established risk appetite limits and escalates limit exceptions to appropriate executive management and the Board. The various business units are responsible for identification, acceptance, and ownership of the risks and for ensuring that market risk exposures are well-managed and prudent.
FRM ensures transparency of significant market risks, helps set risk limits that are consistent with the risk appetite approved by the Board, monitors compliance with risk limits, and escalates limit exceptions to appropriate executive management and the Board.
The estimated impact on our net interest income over a time horizon of one year as of December 31, 2023, 2022, and 2021 are indicated in the table below.
Actions we could undertake include, but are not limited to, growing or contracting the balance sheet, changing the composition of the balance sheet, or changing our pricing strategies for loans or deposits. 66 Table of Conte n t s The estimated impact on our net interest income over a time horizon of one year as of December 31, 2024, 2023, and 2022 are indicated in the table below.
Market risk is monitored through various measures, such as simulations, and through routine stress testing, sensitivity, and scenario analysis. Market risk is the risk that movements in market risk factors, including interest rates, credit spreads and volatilities will reduce our income and the value of our portfolios. These factors influence prospective yields, values, or prices associated with the instrument.
Market risk is the risk arising from adverse changes in market factors, including interest rates, credit spreads, and volatilities on the income and the value of our portfolios. These market factors influence prospective yields, values, or prices of the assets and liabilities of the company.
For example, for interest-bearing deposit balances we utilize a repricing "beta" assumption, which is an estimate for the change in interest-bearing deposit costs given a change in the short-term market interest rates. 68 Table of Contents Our simulation beta estimates in both rising and falling rate environments are generally consistent with cumulative betas utilized in the current rising rate cycle.
For example, for interest-bearing deposit balances, we utilize a repricing "beta" assumption, which is an estimate for the change in interest-bearing deposit costs given a change in the short-term market interest rates. Market risk models, including their key estimates and assumptions, are independently validated by the Company's Model Risk Management department.
The objective of interest rate risk management is to identify and manage the sensitivity of net interest income to changing interest rates to achieve our overall financial objectives. We manage exposure to fluctuations in interest rates through actions that are established by the Asset/Liability Management Committee.
The absolute level and volatility of interest rates can have a significant impact on the earnings and economic value of the company. The objective of interest rate risk management is to identify and manage the sensitivity of net interest income and economic value to changing interest rates to achieve our overall financial objectives.
The amount above the floor was based on the current margin plus the current index assuming the loan repriced on December 31, 2023.
The amount above the floor was based on the current margin plus the current index assuming the loan repriced on December 31, 2024. The adjustable loans may not reprice until well into the future, depending on the timing and size of interest rate changes.
Deposit products reprice lower but certain low interest rate products remain at or hit their floors during the forecast horizon. 70 Table of Contents Management also prepares and reviews the long-term trends of the net interest income simulation to measure and monitor risk.
Management also prepares and reviews the long-term trends of the net interest income simulation to measure and monitor risk. This analysis assumes the same rate shift over the first year of the scenario as described above and holding steady thereafter.
Assets and liabilities with option characteristics are measured based on different interest rate path valuations using statistical rate simulation techniques. The projections are by their nature forward-looking and therefore inherently uncertain and include various assumptions regarding cash flows and discount rates.
Additionally, the results are highly dependent on assumptions for products with embedded prepay optionality and indeterminate maturities. The uncertainty surrounding important assumptions used in EVE analysis may limit its efficacy. Assets and liabilities with option characteristics are measured based on different interest rate path valuations using statistical rate simulation techniques.
Removed
Our market risk arises primarily from credit risk and interest rate risk inherent in our investment, lending, and financing activities. To manage our credit risk, we rely on various controls, including our underwriting standards and loan policies, internal loan monitoring, and periodic credit reviews, as well as our ACL methodology.
Added
The various business units are responsible for implementing effective internal controls and maintaining appropriate processes for identifying, assessing, controlling, and mitigating the market risk arising from their activities consistent with the Company’s established risk appetite and risk limits. Market risk is monitored through various measures, such as simulations, routine stress testing, sensitivity analysis, and scenario analysis.
Removed
Additionally, the Company's Enterprise Risk Management Committee provides board oversight over the Company's loan portfolio risk management functions, and the Audit Committee provides board oversight of the ACL process and reviews and approves the ACL methodology. The Company's Board provides oversight over the Company's investment portfolio and hedging risk management functions.
Added
Our market risk arises primarily from the interest rate risk inherent in our investment, lending, and financing activities. Interest rate risk is the risk to the company’s current or projected financial condition arising from adverse changes in interest rates.
Removed
Interest rate risk is the potential for loss resulting from adverse changes in the level of interest rates on the Company's net interest income. The absolute level and volatility of interest rates can have a significant impact on our profitability.
Added
Interest rate risk exposure is managed primarily through a set of limits that are established considering strategic goals, risk appetite, and market conditions. We manage exposure to fluctuations in interest rates through actions that are established by the ALCO.
Removed
The following table shows the beta realized in the current rising rate market cycle.
Added
Our simulation beta estimates applied to interest-bearing deposits in the rising rate and declining rate scenarios are 55% and 54%, respectively, for December 31, 2024, and are generally consistent with cumulative betas experienced in recent rate cycles. 65 Table of Conte n t s Loan, time deposit, and term debt repricing characteristics are a significant component of interest rate sensitivity.
Removed
Deposit and Funding Repricing Betas During the Current Rising-Rate Cycle (1) Cost of Combined Company (1) Effective Federal Funds Target Rate (Daily Avg.) Interest-Bearing Deposits Total Deposits Total Funding Three months ending 12/31/2023 5.33 % 2.54 % 1.63 % 2.05 % Three months ending 12/31/2022 3.65 % 0.62 % 0.35 % 0.51 % Three months ending 12/31/2021 0.08 % 0.10 % 0.05 % 0.09 % Variance: Peak (Peak value less Q4 2021) +5.25% +2.44% +1.58% +1.96% Repricing Beta: Cycle-to-Date 47 % 30 % 37 % (1) Deposit and funding repricing data present combined company results as if historical Columbia and historical UHC were one Company for all periods through December 2022, for presentation purposes.
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The following tables show certain pricing characteristics including rate type, maturity, and floor detail of the loan portfolio, as well as maturity profile of term funding as of December 31, 2024: Select Asset and Liability Maturity and Repricing Schedules (in Months) at December 31, 2024 (dollars in millions) 4 to 6 7 to 12 13 to 24 25 to 36 36+ Total (4) % Total (2) Loans Fixed (maturity) (1) $ 390 $ 114 $ 355 $ 664 $ 1,045 $ 10,745 $ 13,313 35 % Floating (repricing) (1) 13,432 — — — — — 13,432 35 % Adjustable (repricing) 364 569 441 1,523 1,345 7,107 11,349 30 % Total Loans $ 14,186 $ 683 $ 796 $ 2,187 $ 2,390 $ 17,852 $ 38,094 100 % Time deposits (maturity) (3) $ 3,852 $ 1,272 $ 820 $ 128 $ 17 $ 13 $ 6,102 Term debt (maturity) $ 2,600 $ 500 $ — $ — $ — $ — $ 3,100 (1) Commercial tranche loans that mature in one month are included in the floating rate loan category, not the fixed rate loan category, as these loans reprice in a manner similar to floating rate loans.
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The following tables show certain pricing characteristics including rate type, maturity, and floor detail of the loan portfolio as of December 31, 2023: Loan Repricing Detail (1),(2) Loan Maturities as of December 31, 2023 ($ in millions) Q4 2023 % Total 7 to 12 13 to 24 25 to 36 37 to 60 61+ Fixed $ 15,557 41 % ($ in millions) Mos Mos Mos Mos Mos Mos Total Fixed $ 1,849 $ 224 $ 645 $ 887 $ 2,294 $ 9,658 $ 15,557 Prime 2,868 8 % Floating 1,620 1,140 1,280 778 1,611 4,814 11,243 1 Month 8,375 22 % Adjustable 62 61 234 264 697 9,863 11,181 Floating 11,243 30 % Total $ 3,531 $ 1,425 $ 2,159 $ 1,929 $ 4,602 $ 24,335 $ 37,981 Prime 377 1 % 1 month 180 — % Floors: Floating and Adjustable Rate Loans as of December 31, 2023 (3) 6 months 5,939 16 % ($ in millions) No Floor At Floor Above Floor Total 1 Year 1,259 3 % Floating $6,900 $34 $4,309 $11,243 3 Year 205 1 % Adjustable 1,736 79 9,366 $11,181 5 Year 2,272 6 % Total $8,636 $113 $13,675 $22,424 10 Year 949 2 % % of Total 39% 1% 61% 100% Adjustable 11,181 29 % Total $ 37,981 100 % (1) Index rates are mapped to the closest material index.
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(2) Floating rate loans are indexed to prime and 1-month underlying interest rates. When adjustable rate loans reprice, they are indexed to interest rates that span 1-month tenors to 10-year tenors, as well as the prime rate; the most prevalent underlying index rates are 6-month tenors and 5-year tenors.
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(2) Loan balances reported here are customer principal book balances and exclude items such as deferred fees and costs . (3) Loans were grouped into three buckets: (1) No Floor: no contractual floor on the loan; (2) At Floor: current rate = floor; (3) Above Floor: current rate exceeds floor.
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(3) Time deposits maturing in 3 months or less include $1.5 billion in customer CDs and $2.4 billion in brokered CDs. (4) Total loans above vary from the amount reported on the Company’s Consolidated Balance Sheets due to purchase accounting adjustments and deferred fees and costs, which are not rate sensitive.
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Actions we could undertake include, but are not limited to, growing or contracting the balance sheet, changing the composition of the balance sheet, or changing our pricing strategies for loans or deposits.
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Floors: Floating and Adjustable Rate Loans at December 31, 2024 (dollars in millions) No Floor (1) At Floor (1) Above Floor (1) Total Floating $ 8,830 $ 339 $ 4,263 $ 13,432 Adjustable 1,622 66 9,661 11,349 Total $ 10,452 $ 405 $ 13,924 $ 24,781 % of Total 42 % 2 % 56 % 100 % (1) Loans were grouped into three buckets: (1) No Floor: no contractual floor on the loan; (2) At Floor: current rate = floor; (3) Above Floor: current rate exceeds floor.
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It should be noted that prior to 2022, although net interest income simulation results are presented for down rate scenarios, most market rates would have reached zero before declining the full 100 basis points, and our simulation floors rates at zero and assumes they do not go negative.
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This approach provides a longer-term view of interest rate risk, capturing all future expected cash flows. EVE measures the extent to which the economic value of assets, liabilities and derivative instruments may change in response to fluctuations in interest rates. Importantly, EVE values only the current balance sheet, excluding the growth assumptions used in net interest income sensitivity analyses.
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Interest Rate Simulation Impact on Net Interest Income As of December 31, 2023 Year 1 Year 2 Up 300 basis points (2.1) % (1.9) % Up 200 basis points (1.4) % (1.1) % Up 100 basis points (0.7) % (0.5) % Down 100 basis points 0.6 % 0.1 % Down 200 basis points 1.1 % (0.2) % Down 300 basis points 1.6 % (0.8) % In general, we view the net interest income model results as more relevant to the Company's current operating profile (a going concern), and we primarily manage our balance sheet based on this information.

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